6 NOV. 2019
European markets in general continue to score relatively highly with Germany and the Netherlands, amongst others, still showing resilience away from the retail sector.
The feedback from the UK is still reflective of the uncertainty associated with Brexit which is impacting on investor behaviour.
Retail sector weakness shows little sign of abating while prime offices remain a bright spot in Switzerland.
The Q3 2019 Switzerland Commercial Property Monitor results are a little weaker at the headline level, with the Occupier Sentiment Index falling to -28 (down from -14 in Q2). However, feedback remains mixed across sectors, as respondents report falling demand for retail space but cite an increase within the office and industrial sectors.
Twelve-month rental projections remain firmly negative for the retail sector, pointing to a -3% fall for rents in prime locations and -7% fall for secondary. In contrast, prime office rents are expected to rise by 2%, while prime industrial rents are anticipated to rise by 1%. That said, all secondary sub-sectors display a negative outlook.
The Investment Sentiment Index (ISI) remained in broadly neutral territory at -2, a slight improvement of -5 previously. In both the office and industrial sectors, a steady rise in investment enquiries was met with a stable trend in the supply of properties available on the sales market. Conversely, the retail sector saw another drop-off in demand while supply edged upwards.
For the coming 12 months, secondary retail values are expected to fall by around -5%, although expectations are only modestly negative for prime. Although the outlook is broadly flat for secondary markets, solid gains are anticipated across the prime industrial sector, with expectations also positive for prime office values (albeit to a slightly lesser degree).
Thirty nine percent of respondents feel the market is in the peak stage of the property cycle (43% in Q2), while 34% view it to be in the early to middle stages of a downturn (unchanged from Q2).