Forecast of commercial real estate market in Europe: problems of the segment
The situation, which develops around Brexit, makes experts revise their assessment of the real estate market in European countries. Withdrawal of Great Britain from the EU forces many companies to relocate their representative offices, which means that demand and supply for office space rental will change. To understand the current trends, the experts have made a new forecast of the commercial real estate market in Europe.
Most international companies chose London for their representative offices in the EU. But now, due to the country’s exit from the Union, they are looking for new states. It is expected that the hype will affect the office real estate market in Paris, Amsterdam, Frankfurt and other major cities. The demand for premises will increase, which will strengthen the already observed shortage of supply in this segment.
Next year it is planned to put into operation 18% more office buildings than last year. This will help meet the demand to some extent, but not to the full extent. Lease agreements have already been signed for 40% of new offices. According to analysts’ forecasts, the lack of commercial real estate supply will be observed for about 5 more years.
Shopping facilities on the main streets of cities or in shopping centers have been popular for a long time. About 90% of sales in European countries are made in stores, and some retail chains, represented online, open their outlets. The most interesting for sellers are tourist cities with a large flow of people. There is a growing demand for shopping space in Paris, Milan, Barcelona, London and other famous cultural and entertainment centers in Europe. The number of objects here will increase. But in small provincial towns not so high demand for commercial real estate.
The volume of purchases through the Internet is steadily growing. The largest number is observed in the southern part of the region. The total turnover of online commerce in Europe last year was 602 billion dollars, and until the end of the current analytics promise an increase of 14%. Along with the increase in online purchases, the demand for storage space from online stores is also growing.
Many companies refuse to rent a separate office in favor of coworkings. The popularity of this option of renting a workplace is growing, which is especially noticeable in Paris, Berlin, Dublin, London, Copenhagen and other cities.
Despite the attractiveness of the European commercial real estate market, investors are in no hurry to invest in new projects. They are waiting for time to see how Brexit will end.
They are increasingly interested in the markets of Eastern and Central Europe. Some large companies have already invested in construction in these regions.
Asian businessmen remain leaders in investing in European real estate. Last year they invested about 23.2 billion euros, which is 57% more than the previous year. Investments are expected to only grow.