European Property Returns

A new research piece came out from Colliers giving an overview of the European property markets:


Berlin, Frankfurt and Madrid are red hot markets across the three sectors, and London looks pretty decent in Logistics and Retail despite Brexit.


Prime yields in the core countries have been basically flat in the last two years, while their spread to government bonds have shrunk.

Could this be the end of the fall in prime yields?

US Real Estate Performance 08/22

This is from the always fascinating Hoya Capital. After looking at Q2 earnings numbers, let’s see how the market behaved year-to-date:

Source: REIT Earnings Recap: Real Estate Cycle Reignites

Good performance from the Manufactured Home, Student Housing and Lodging was able to pull back REITs in the black YTD, while Homebuilders are struggling.

An interesting dichotomy is the difference between the performance of Homebuilders and Residential REITs.

Where Are We in the Cycle?

Source: Commercial Real Estate Outlook: Are Cap Rates Heading Up?

Based on this, commercial property prices are slowly turning lower, lead by the malls which have been hit hard by retail store closures. The Industrial and Manufactured Home segments look more compelling.

And this is how the different US real estate segments performed in the past 12 months:

Source: Bloomberg

The difference is striking: while the whole sector declined by more than 8%, the Manufactured Homes and Industrial segments are up more than 8%, Regional malls declined almost 14%, and Shopping centers are down 24%! This is quite a dispersion among REITs, and based on the above forecasts can last for a while.


Disclosure: we are long VNQ.