Tick-up in capital value growth to be short-lived

Euro-zone property investment rose by 9% y/y last year to reach a new high of €183bn. But not all markets shared in the spoils, with Italy posting a 20% decline. At the all-property level, yields edged down by 2bps, taking the annual rate of compression to 11bps – less than half of 2017’s decline. A pick-up in office and retail rental growth underpinned a rise in capital value growth. But with a poor economic outlook, that is more likely to be a one-off rather than the start of a new upward trend.