A series of surveys have suggested a number of commercial property markets in Europe are on the up.
Property investors across Britain and Europe will have spent much of the last few years surveying a distinctly gloomy landscape, after the bubble burst in 2007 and the continent descended into deep recession.
However, even in the deepest downturn since the Great Depression, there was always going to be a point where things started to get better. With prospects apparently picking up in many locations, there is reason for optimism again.
Certain localities can ride out economic storms better than others, with London being one such case. It’s ‘safe bet’ status, already high profile and perhaps even the prestige boost of the 2012 Olympics have enabled the UK capital to remain a scene of positive activity. Towering new skyscrapers like the Shard have arisen and foreign investors remain keen.
This situation was emphasised by a recent report on the central London office market in the third quarter of 2013, from commercial property brokers Cushman & Wakefield. Its figure for the take-up of space in this period was 2.8 million sq ft, 18 per cent up on the second quarter and 44 per cent up on the equivalent time in 2012. This positive news tallies with CBRE figures for the quarter, with 3.2 million sq ft were taken up in the central London office occupier market, a year-on-year increase of a third.
Head of West End office agency at Cushman & Wakefield Andy Tyler said: “The upturn in leasing activity in London’s West End seen this quarter reflects an air of positivity which hasn’t been present for some time.
“We are seeing the return of higher rents, competitive bidding and an increased number of requirements. I am convinced that we will look back at this moment in time as being the turning point for the cycle.”
While London may benefit from special factors as a capital city and leading world financial centre, the improvement in the market is not confined to the metropolis in the south-east of England. For example, the Herald recently reported on a notable increase in demand for commercial space in Scotland, with third quarter figures produced by property consultant GVA James Barr indicating Glasgow’s biggest increase in three years, while take-up of space in Edinburgh nearly doubled.
The report also noted significant improvements in the nine largest UK cities outside London, proving the British recovery is not confined to the capital. Investment Property Databank’s figures for September showed commercial property values rose for the fifth month in a row in September.
While matters are improving in Britain, investors looking around Europe will find improved prospects there too. Knight Frank’s Autumn 2013 European Market Indicators report suggested the bulk of the commercial property markets are showing at least some signs of recovery. Although some German cities have seen slight downturns, Madrid and Milan have stabilised – defying their national economic woes – while Prague stands out as a strong performer, doing as well as London and Edinburgh.
If Italy’s largest city and the Spanish capital are doing well, the situation in another peripheral country ranked among the worst-hit by the downturn has been particularly notable. Ireland suffered a huge property crash in 2007-08, but the Investment Property Databank figures for the third quarter revealed the first rise in Irish values in six years, RTE noted.
So while there may be some usual suspects among the promising locations for investments, those keen to buy into commercial property could also find some surprises.