UK leads falls in post-GFC nadir for European real estate

The UK was the worst performing real estate market in the gloomiest quarter for Europe since the depths of the global financial crisis. Index provider MSCI’s Quarterly Property Index showed that European commercial real estate delivered its poorest investment performance – rental income plus change in asset values – since 2008 over the third quarter of this year. Total returns stood at -2.2%, their lowest since a -6.4% return in the final quarter of 2008. “Climbing yields were the major drag on the index, and the impact on the total return was the worst since the inception of the index,” said Tom Leahy, MSCI’s head of EMEA real assets research. The index showed that the UK was the worst-performing country market, with a return of -4.1% led by a correction in the industrial sector. That compared with -2.9% in Germany and -2.1% in France. Europe-wide, logistics and industrial properties were the worst-performing asset class by return, at -3.9%. Earlier this week, CBRE said the UK commercial real estate market is likely to suffer from high inflation and rising interest rates for much of next year, but that the outlook should improve heading into 2024. To send feedback, e-mail tim.burke@eg.co.uk or tweet @_tim_burke or @EGPropertyNews Image © Frans Ruiter/Unsplash