Catella (investment group)
2022
Catella
The Catella European Residential Market Map Q1 2022 provides a comprehensive overview of the evolving dynamics within the European housing markets as of early April 2022. It highlights the resilience and adaptability of the residential sector amidst economic challenges, such as inflation and geopolitical tensions, particularly due to the ongoing war affecting several regions. The report underscores that despite these hurdles, residential real estate continues to attract significant interest from capital investors. The analysis reveals that the average monthly apartment rent across the 63 cities surveyed is currently €16.05 per square meter, marking a 3.82% increase from the previous year. In contrast, average inflation in the surveyed countries stood at 6.01%. Notably, the report identifies Liège in Belgium as the most affordable rental market, while Geneva in Switzerland remains the priciest, with rents peaking at €30.80 per square meter. This disparity in rental prices reflects the varied economic conditions and demand levels across different European cities. Additionally, the report shows a rise in average purchase prices for apartments, which now average €5,141 per square meter, up by 2.47% compared to last year. Yield levels are also addressed, with prime yields averaging 3.41% across the analyzed markets. Stockholm and Zurich report the lowest yields, while Baltic cities like Riga and Vilnius stand out with more attractive yields of 5.25%. This comprehensive assessment provides insights into the potential challenges and opportunities within the European residential market moving forward.
4 April 2022, Europe | News
Catella European Residential Market Map Q1 2022
With the end of the first quarter of 2022, a clear message can be heard from the European housing markets: It remains THE most dynamic real estate class.
A look back shows this development since 2015. But there are clouds on the European economic sky: inflation, war, and an overall declining economic development in many countries, at least as long as the war and its direct consequences last. Furthermore, the expected interest rate hike. A mixed situation which should give reason to expect a turn of time: But is that really the case?
Pull-forward effects in the event of an interest rate hike, a still significantly low supply, and urbanisation has not come to a standstill after 2 years of the pandemic. What we can of course also observe - compared to 2015 - is a "new" group, which is now appearing more strongly: capital investors in European countries. One can certainly speculate about the individual motives, the lack of alternative investments has undoubtedly led many with liquidity in a low interest rate environment into the asset class. In the future, they will act more cautiously, which must be considered when analysing our new housing market map – this time for 63 cities and 20 countries in Europe.
- The average monthly apartment rent (all years of construction) of the 63 analysed cities is currently €16.05/sqm, which corresponds to an increase of 3.82% compared to our analysis last year in the first quarter of 2021. In the same period, average inflation was 6.01% in the 20 countries surveyed.
- The cheapest apartment rents are again found in the Belgian city of Liège (€9.50/sqm), followed by Brno (€9.80/sqm) in the Czech Republic and Malaga in Spain with an average of €9.90/sqm.
- The most expensive rental market is still in Geneva, Switzerland, with a value of €30.80/sqm. Other high-priced residential locations can be found in London (€30.70/sqm), Paris (€28.80/sqm) and Luxembourg (€30.00/sqm).
- In parallel to our last analysis a year ago, the average purchase price for apartments in Europe (all years of construction) shows a visible increase to €5,141/sqm, which means an increase of 2.47%. Prices range from €1,800/sqm in Riga to €15,260/sqm in Geneva.
- The average European prime yields for apartment buildings are 3.41% in the 63 analysed markets. We continue to see a falling yield level in many European locations, we only assumed a future sideways movement in the United Kingdom, Poland, and Switzerland.
- As in the previous year, the lowest yield of all European housing markets can be found in Stockholm (existing apartments) at 1.20%. At 1.30%, Zurich has a similarly low yield level.
- The most attractive prime yields of the 63 markets analysed are in the Baltic cities of Riga and Vilnius, at 5.25%, followed by the Polish locations of Kraków and Wroclaw, each at 5.00%.