In a new report, DTZ estimates that prime commercial property across Europe will remain a safe bet for investors, with returns averaging eight per cent over the next five years.
DTZ's Q2 European Property Forecasts report highlights that industrial property will see the highest returns, at an average of nine per cent per year. The retail market follows in at second with eight per cent, with office trailing behind at 7.5 per cent.
Interest in London, Dublin and Paris will remain high over the next five years, according to the report, with core markets in both Central and Eastern Europe also offering high yields for the 2013-18 period. Even though commercial property returns may decline slightly this year during the global economic recovery, the large capital cities will continue to be 'safe havens' for investors, some even reaching double digit returns across all sectors.
In total, DTZ has estimated that commercial property rents across the continent will grow by 2.5 per cent by 2018, with rental growths of 3, 2 and 1.5 per cent recorded in retail, offices and industrial respectively.
According to Property Magazine, Fergus Hicks, global head of forecasting at DTZ, said: “Overall we’re expecting prime property in Europe to deliver returns averaging eight per cent over the next five years. However, market selection can boost return prospects significantly. We think Dublin is particularly attractive, as returns are expected to average 15 per cent pa across all sectors.”
These figures follow the recent news by BNP Paribas that 82 per cent of commercial property acquisitions in the City of London have been from overseas buyers, highlighting the capital city as a central hub for global commercial investment.