Newsletter Q1 UK 2018

Newsletter Q1 2018

Market update Q1 2018

TREES DON’T GROW TO THE SKY

By Peter Winther, Partner and CEO, Sadolin & Albæk

Property market remains strong despite jittery financial markets Financial market sentiment was extremely jittery in the first quarter of 2018. Global economic fundamentals are picking up, supported by strong global growth rates. In the United States, the economy is so strong as to trigger inflationary tendencies, with the Federal Reserve responding as expected with regular rate hikes. Despite today’s fairly strong European growth momentum and an increasingly tight labour market in Germany in particular, where wage increases are quite considerable, the European Central Bank (the ECB) remains reluctant to tighten monetary policy.

The market for investment property is however still characterised by stable and healthy developments. Office vacancy rates continue on a downward trend. In central Copenhagen, demand for up-to- date office space is strong, but supply scarce, and the market sees an increasing number of office lets at historically high rent levels of some DKK 2,000 per sqm p.a., excluding operating costs and taxes. Also, the letting market for industrial, storage and logistics facilities is strong, with low and downtrending vacancy rates.

O ce vacancy rate remains low

12%

10%

All in all, this makes for quite favourable framework conditions from an investment market perspective.

8%

6%

4%

Nonetheless, stock markets have been rather volatile, in most countries remaining weak in 2018 to date. There are several reasons for this, including growing concerns of further protectionist measures evolving into an actual trade war. Moreover, geopolitical uncertainty remains strong.

2%

0%

08 09 10 11

12 13 14 15 16 17 18

Copenhagen, o ce

Copenhagen and environs, industrial/logistics

Following a sharp decline, Greater Copenhagen industrial/logistics vacancy rates have stabilised, whereas o ce vacancy rates remain low

Sources: Ejendomstorvet.dk and Sadolin & Albæk

2

Published by Sadolin & Albæk. Reproduction or citation only with acknowledgement of source. ISSN 2246-6967 +45 70 11 66 55, sa@sadolin-albaek.dk