Frankfurt, 29 January 2021. In its latest “Corestate PropBlog” post, Corestate analyses the office property market cycles since the start of the 21st century. The key takeaways for the current situation are:

  • On average, it took nine to ten quarters for European office markets to correct in a downturn. In terms of the current cycle, this would indicate a trough in mid-2022. It remains to be seen whether this theory holds up under COVID-19.
  • Two components determine development: 1. the rental market (the income side), which reflects rents and vacancies, and 2. the investment market (the yield side), which reflects the relation between net annual rent and purchase value.
  • The rental market is slower to respond to economic slumps than the investment market, with marked differences in performance during recovery phases.
  • One noteworthy feature of the current crisis is that the investment market – which, in the past, has anticipated and preceded the development of the rental market – has so far remained relatively unshakeable in the core segment. This unusual situation is being fuelled by the relative attractiveness of the real estate asset class in the low-interest environment and the continued high level of liquidity among investors.
  • As a result, the rental market is the determining factor in this cycle. In-depth submarket- and asset-specific analyses are crucial for successful investments.

Mark Holz, Group Head of Research at Corestate: “In a crisis phase, it is worth taking a look at previous economic cycles. While every crisis is different in terms of form and duration, there are certain similarities that provide valuable indicators with regard to investment timing. Every forecast depends to a crucial extent on the further development of the COVID pandemic. But because the pandemic has proven to be difficult to predict, scenario thinking will remain the key to success in 2021 as well.”

The full article is attached to this email or can be accessed online at: https://corestate-capital.com/de/2021/01/one-chart-to-rule-them-all-europes-21st-centurys-office-cycles-in-hindsight/

About CORESTATE Capital
CORESTATE is an investment manager and co-investor with around € 28 billion in assets under management. The company sees itself as a manager for the entire length of the real estate value chain. Thanks to its fully integrated real estate platform, it is able to offer investors a wide range of services, especially the opportunity to invest in large-scale societal trends such as urbanisation, demographic shifts or sustainability – trends that will continue to have a decisive influence on the living and working environment in the long term. The consistent focus on asset classes that will be successful in the long run constitutes a central cornerstone of the company strategy. At CORESTATE, all concepts are supported with ESG expertise that is unique to the industry. With some 800 experts, CORESTATE offers clients and investors a full range of services and consultation from a single source, from project financing and real estate management to sales. CORESTATE is listed on the Frankfurt Stock Exchange (SDAX) and operates as a respected business partner for institutional and semi-institutional investors as well as high-net-worth private investors in 13 countries across Europe, with offices in Frankfurt, Vienna, Zurich, Paris, Madrid and London.

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