Catella sees European residential supercycle

Jonathan Boyd
Catella sees European residential supercycle

Catella Research, part of the Catella business listed on Stockholm’s First North Premier market, has said its latest analysis of demand for residential real estate across Europe suggests that prices are set to continue rising.

The asset class stands out as a strong performer over the past decade, despite significant differences in yields between different regional markets and cities. But in the past 24 months demand “has rocketed” Catella Research says, adding “at present there is no discernable end in sight.”

“Residential investment came to a total of €37.5bn in 2015, according to the Catella Market Indicator – Residential Europe 2016.”

The research points to two key factors stimulating demand: rising liquidity and a rising rate of urbanisation over the past decade. Supply growth remains slow. That said, investors need to be aware of the impact on yields of rapidly rising property prices. Although cities such as London, Paris, Munich, Hamburg and Stuttgart are popular, high rental prices are offset by rapidly rising property purchase prices. This is keeping rental yields to levels between 3%-4%. In turn this is highlighting better returns from so-called category B and C towns in Germany and France, where yields of up to 6% are available.

Other interesting markets include Polish cities such as Warsaw, Gdańsk and Łódź, as well as increased transactions across Spain more recently.

To view the findings of the Catella Market Indicator – Residential Europe, Spring/Summer 2016 click here: