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Press release

2 SEP. 2019

Euro markets still leading the way although momentum fades

RICS has issued the Global Commercial Property Monitor for Q2 2019.

The overarching picture painted by the latest RICS Global Commercial Property Monitor (GCPM) is rather positive: real estate sentiment across the world remains resilient. However, there are a few signs of concern, whether it is the ongoing trade dispute between the US and China (which has trimmed some of the numbers coming from the APAC region) or the softer macro picture in Europe (where momentum while still positive, is less so than before).

These challenges are largely viewed as temporary though and not reflected in medium term expectations. For instance, taking the whole list of countries included in the GCPM, twelve-month capital value projections in Q2 averaged 1.7% (on an unweighted basis) compared with 1.6% in Q1. Meanwhile for rents, the equivalent figures are 1.5% and 1.4% respectively.

European trends

The feedback for key European markets also remains generally positive but there has been a gentle easing in the upbeat trend lately.

For Germany, the headline Occupier Sentiment Index (OSI) has dropped to +19 (its least positive reading since Q3 2015) and the Investment Sentiment Index (ISI) went down to +24 (the lowest number since Q3 2013). This pattern is replicated in most of the other larger markets in the region, including France, the Netherlands and Spain. The picture in Switzerland and the UK is different, reflecting country specific issues, although it is notable that the key metrics from the latter suggest that the negative sentiment in the market is lessening despite most respondents acknowledging it remains expensive.

Meanwhile, the feedback from some of the smaller European markets remains strong. Hungary, in particular, continues to score highly as do Portugal, the Czech Republic and Greece (the field work period closed before the recent general election).

The outlook for commercial property markets across Europe remains reasonably bright on the whole, even if some impetus is being lost given the late stage of the cycle. That said, the retail sector is increasingly showing signs of weakness across several nations, and this issue is of course more structural than it is cyclical.

Tarrant Parsons
RICS economist

He added: "It appears that falling demand from retailers will continue to exert downward pressure on rents, with secondary locations likely nearing the brunt of the decline. On the other hand, the industrial sector continues to benefit from changing consumer preferences, and this looks set to support further gains in both rents and capital values going forward. In the office sector, sentiment remains generally favourable across the board, with occupier demand reportedly rising in 17 of the 19 European countries covered by the survey in the second quarter of 2019.”

Markets highlights:


The momentum continues to fade gradually from the market, even though the overall sentiment remains positive. Indeed, the headline OSI was reported at +9 in Q2, the most modest reading since Q1 2017. Tenant enquiries continue to rise in a relatively solid fashion across the office and industrial sectors, while demand has now fallen for eight consecutive quarters in the retail segment. Given this, the respondents foresee secondary retail rents falling over the coming 12 months, while the outlook has turned broadly flat for prime. At the other end of the spectrum, the prime office and industrial sectors are expected to deliver solid rental growth, although projections have been cut relative to Q1.


In the occupier market, respondents continue to report strong tenant demand growth in both the office and industrial sectors, with vacancies being pushed down as a result in each case. Conversely, occupier demand fell for a fifth quarter in a row, as the pace of decline seems to have accelerated in Q2. This has led to a further rise in availability of retail space, prompting landlords to increase the value of incentive packages on offer to tenants.


The Italian results point to a slight improvement in the occupier market, with the OSI rising to +16, from +2 in Q1. Despite being only modestly positive, this represents the strongest reading since 2017. Over the coming year, respondents also upgraded their projections for rental growth across virtually all categories compared with the first quarter. There was also a small rise in international enquiries for retail assets.

The Netherlands

The demand continues to outstrip supply on both the occupier and investment sides of the market. The Occupier and Investment Market Sentiment Indices came in at +21 and +19 respectively (+24 and +23 previously), albeit both measures have moderated gradually over recent quarters. In terms of investment trends, enquiries (from both domestic and international investors) fell across the retail sector. By way of contrast, the office and industrial sectors continue to display comfortably positive trends.


The results show that conditions continue to improve modestly in Poland. While tenant demand keeps rising in the office and industrial sectors, enquiries to occupy retail space were stagnant for the second consecutive report. Meanwhile, availability picked up at the strongest pace (in net balance terms) since 2015, with a rise noted in all sectors.


The results for Spain point to a growth in activity in all market areas. Although 43% of respondents believe that the market is still going through a moment of growth, 28% estimate that it is close to hitting the ceiling (in the first quarter this percentage was 25%).

For more information please contact:

Laura Lindberg, RICS, Head of Media & Communications, Europe
t +32 2 739 42 27