Catella (investment group)
Catella
2022
The Catella European Residential Market Map Q1 2022 provides an insightful overview of the European housing market as of April 2022. Published by Catella, an investment group specializing in real estate and financial services, this report analyzes market dynamics across 63 cities in 20 countries. It highlights trends since 2015, noting that the residential real estate sector remains the most dynamic despite facing challenges such as inflation and geopolitical tensions. 📈 Current Market Trends As of the first quarter of 2022, the average monthly apartment rent across the analyzed cities stands at €16.05 per square meter, reflecting a 3.82% increase compared to the same period in 2021. However, this rental growth is occurring alongside an average inflation rate of 6.01% in the surveyed countries, suggesting that while rents are rising, they may not keep pace with broader economic pressures. 🏙️ Regional Variations in Rent The report reveals stark contrasts in rental prices across Europe. The lowest rents can be found in Liège, Belgium (€9.50/sqm), followed closely by Brno, Czech Republic (€9.80/sqm), and Malaga, Spain (€9.90/sqm). In contrast, Geneva, Switzerland, continues to lead as the most expensive rental market, with prices soaring to €30.80/sqm, followed by London (€30.70/sqm), Paris (€28.80/sqm), and Luxembourg (€30.00/sqm). 🏡 Apartment Purchase Prices The average purchase price for apartments across Europe has risen to €5,141 per square meter, marking a 2.47% increase year-on-year. Prices vary significantly, from €1,800/sqm in Riga to a staggering €15,260/sqm in Geneva. This trend underscores the growing demand for residential properties, even in the face of economic uncertainty. 📊 Investment Yields The average prime yields for apartment buildings in the analyzed markets are currently at 3.41%. Notably, Stockholm reports the lowest yield at 1.20%, while Zurich follows closely at 1.30%. In contrast, the most attractive yields are found in the Baltic cities of Riga and Vilnius, both offering 5.25%, and in Poland's Kraków and Wroclaw at 5.00%. These figures indicate a continuing decline in yields across many European locations, which investors should consider when evaluating potential housing investments. In summary, while the European residential market shows resilience and growth, challenges such as inflation and varying rental prices across regions must be carefully navigated by stakeholders interested in sustainable housing solutions.
Catella (investment group)
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%.