MARKETVIEW

European Valuation Monitor Q1 2021

Renewal across sectors, back to Pre-Covid
level. Retail declines, Industrial best
performer.
0.3% 0.4% -1.0% 2.3%

Figure 1: Pan-Europe sector capital values

Q4 2007 = 100 All Property Industrial Retail Office

120

110

100

90

80

70
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Q4 2011
Q2 2012
Q4 2012
Q2 2013
Q4 2013
Q2 2014
Q4 2014
Q2 2015
Q4 2015
Q2 2016
Q4 2016
Q2 2017
Q4 2017
Q2 2018
Q4 2018
Q2 2019
Q4 2019
Q2 2020
Q4 2020
Source: CBRE Valuation, Q1 2021

OVERVIEW

• On the Quarter, positive capital value performance has been recorded in Europe in Q1 2021. The “All property”
index moved up (+0.3%) driven by the Industrial and Office sector with value growth of 2.3% and 0.4% respectively.
Simultaneously, Retail saw a negative capital value (-1.0%) but comes back to the Pre-Covid level.

• Capital values recorded in Europe for Q1 2020 moved up, returning to a positive Pre-Covid level. All the countries
saw a positive capital value performance with the exception of France and the CEE regions. Logistics continued to
be the most resilient sector with a capital value growth standing at 2.3% vs 3.6% in Q4 2020 (vs 1.7% in Q4 2019).
On the other hand, the Office market values increased at 0.4% vs 0.0% in Q4 2020 despite negative figures
disclosed by France, UK and the CEE regions. Even if the disruption caused by the lockdown and social distancing
measures accentuated the pressure on Retail, Q1 2021 registered an improvement of the sector back to Q4 2019
level at -1.0% vs -2.3% in Q4 2020.

• On an annualised basis , the “All property” values remained negative -2.1% over the 12 months to end of Q1 2021
(-1.5% ex UK), which compares to 0.8% in the period to end of Q1 2020 (2.5% ex UK) mainly driven by the Retail
sector with value fall of -9.3% over the trailing 12 months (TTM), followed by the Office sector with -0.4%. However,
the industrial sector emphasized a positive performance at 7.4% over the TTM. As noted above, the shopping sector
saw the strongest falls TTM, reaching -11.2% for Europe excluding UK, mainly driven by the Netherlands and
Benelux (averaging -22%).

• At the “All property” level, Germany and the Nordics finally recorded positive values: 1.7% (3.6% in Q1 2020) and
0.3% (2.9% Q1 2020). The capital value growth of the Industrial sector moved up in Q1 2021 at 7.4%. Despite the
CEE regions, all the countries are averaging around 7.3%.

• Grouping equivalent yields into quartiles in Q1 2021, we see that the prime and second tier quartiles saw marginal
expansion; whereas third saw compression with a little movement for the fourth quartile.

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REGIONAL PERFORMANCE

Figure 2: Regional European capital values

Q4 2007 = 100
France

120.00 Germany

110.00 UK

100.00
Netherlands

90.00
Southern Europe
+ Ireland

80.00
CEE

70.00
Nordic

60.00
Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 Q4 18 Q4 19 Q4 20

Source: CBRE Valuation, Q1 2021

Figure 3: Annual Capital Value Change Q3 20 and Q4 20 Figure 4: Annual (TTM) Capital Value Change
France Germany

Q1 2021 Q4 2020 UK Netherlands

Southern Europe + Ireland CEE
Europe Nordic
15%
Europe ex. UK
10%
UK (GBP)

France 5%

Germany
0%
Netherlands

CEE -5%

Southern Europe + Ireland

-10%

Nordic
-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% -15%
Q3 12
Q4 12
Q1 13

Q3 14
Q4 14
Q1 15

Q2 16
Q3 16
Q4 16
Q1 17

Q2 18
Q3 18
Q4 18
Q1 19

Q2 20
Q3 20
Q4 20
Q1 21
Q1 12
Q2 12

Q2 13
Q3 13
Q4 13
Q1 14
Q2 14

Q2 15
Q3 15
Q4 15
Q1 16

Q2 17
Q3 17
Q4 17
Q1 18

Q2 19
Q3 19
Q4 19
Q1 20

Source: CBRE Valuation, Q1 2021 Source: CBRE Valuation, Q1 2021

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COMPONENTS OF CAPITAL VALUE CHANGE

Figure 5: All Property Capital Value Components (Europe ex-UK)
A L L P R O PE RTY Source: CBRE Q1 2021
4.0%
3.0% ERV impact
2.0% Yield impact
1.0% Capital Return
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%

Q1 14
Q3 14
Q1 15
Q3 15
Q1 16
Q3 16
Q1 17

Q1 20
Q3 20
Q1 21
Q1 12
Q3 12
Q1 13
Q3 13

Q3 17
Q1 18
Q3 18
Q1 19
Q3 19
Figure 6: Industrial Capital Value Components (Europe ex-UK)

I N D U S TRI AL
Source: CBRE Q1 2021
4.0%
3.0% ERV Impact
2.0% Yield Impact
1.0% Capital Value
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
Q1 12
Q3 12
Q1 13
Q3 13
Q1 14
Q3 14
Q1 15
Q3 15

Q1 18
Q3 18
Q1 19
Q3 19
Q1 20
Q3 20
Q1 21
Q1 16
Q3 16
Q1 17
Q3 17
Figure 7: Retail Capital Value Components (Europe ex-UK)
RETAIL Source: CBRE Q1 2021
4.0%
3.0% ERV Impact
2.0% Yield Impact
1.0% Capital Value
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
Q3 13
Q1 14
Q3 14
Q1 15
Q3 15
Q1 16
Q3 16
Q1 17

Q1 20
Q3 20
Q1 21
Q1 12
Q3 12
Q1 13

Q3 17
Q1 18
Q3 18
Q1 19
Q3 19

Figure 8: Office Capital Value Components (Europe ex-UK)

Source: CBRE Q1 2021
OFFICE 4.0%
3.0% ERV Impact
2.0% Yield Impact
1.0% Capital Value
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
Q1 12

Q1 15
Q3 15
Q1 16
Q3 16
Q1 17

Q3 19
Q1 20
Q3 20
Q1 21
Q3 12
Q1 13
Q3 13
Q1 14
Q3 14

Q3 17
Q1 18
Q3 18
Q1 19

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KEY INDICATORS
CBRE European Valuation Monitor Q1 2021 Index, Q4 2007 = 100
Region % 3 months % Year-to-date % 12 months Q2 20 Q3 20 Q4 20 Q1 21

France -0.4% -0.4% -4.6% 113.7 113.5 112.5 112.1

Germany 1.1% 1.1% 1.7% 117.6 117.8 119.0 120.3

UK 0.7% 0.7% -3.8% 91.8 91.0 91.1 91.7

Netherlands 0.0% 0.0% -3.9% 70.6 70.3 70.0 70.0

Southern Europe + Ireland 0.2% 0.2% -1.7% 79.5 79.7 79.4 79.5

Nordics 0.9% 0.9% 0.3% 122.3 122.8 122.8 123.9

CEE -0.3% -0.3% -3.8% 76.3 76.7 76.0 75.8

Source: CBRE Valuation, Q1 2021

CBRE European Valuation Monitor Q1 2021 Index, Q4 2007 = 100

Sector % 3 months % Year-to-date % 12 months Q2 20 Q3 20 Q4 20 Q1 21

Office 0.4% 0.4% -0.4% 112.7 112.8 112.8 113.3

Retail -1.0% -1.0% -9.3% 80.5 79.3 77.4 76.6

Industrial 2.3% 2.3% 7.4% 117.2 119.4 123.6 126.4

All Property 0.3% 0.3% -2.1% 101.1 101.0 100.9 101.2

All Property ex-UK 0.4% 0.4% -1.5% 101.4 101.6 101.4 101.8

Source: CBRE Valuation, Q1 2021

Cumulative evolution of Europe ex-UK yield quartiles (bps)

4Q11 = 0
400 Qrtl2 Spread Grouping equivalent yields into quartiles
Qrtl3 Spread and then tracking like-for-like movements
Qrtl4 Spread from the preceding quarter, CBRE
300 highlights polarisation and/or
convergence of yields over time.
200
▪ Quartiles 1 and 2 saw marginal
expansion; whereas 3rd saw
100 compression with a little movement for
the 4th quartile.
0 ▪ The spread between Quartile 1 and
2,3,4 narrowed
-100

-200
Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4
11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20
Source: CBRE Valuation, Q1 2021

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CONTACTS
VALUATION ADVISORY - INTERNATIONAL

EXPLANATORY NOTE

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy,
we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and
completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be
reproduced without prior written permission of CBRE.