Catella European Residential Market Map Q1 2022

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%.

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