Mr. Phil Tily reports

ALTUS GROUP RELEASES ITS Q2 2024 PAN-EUROPEAN DATASET ANALYSIS ON CRE VALUATION TRENDS

Altus Group Ltd. has released its Q2 2024 pan-European data set analysis on European property market valuation trends.

Each quarter, Altus Group centralizes and standardizes CRE (commercial real estate) valuation data for the European market, pulling insights into the factors driving commercial property valuations. The Q2 2024 aggregate data set included pan-European open-ended diversified funds, representing 29 billion euros in assets under management. The funds cover 17 countries and primarily span the industrial, office, retail and residential property sectors.

"Property values across the pan-European valuation data set remained largely unchanged in Q2 2024, registering a slight sequential decline of only 0.06 per cent over Q1 2024," said Phil Tily, senior vice-president at Altus Group. "This marks the smallest downward revision since values began declining in Q3 of 2022. Over this eight-quarter period, the property values within this data set have dropped by a total of 16.5 per cent. The minimal decrease in Q2, coupled with the recent interest rate cut, points to more stability ahead as value declines are moderating significantly."

Despite the European Central Bank's 25 basis point cut in the base interest rate in June, yields continued to move out for a ninth consecutive quarter, putting further downward pressure on values though at a moderating pace. Low-single-digit yield increases were recorded across all sectors and accounted for a minus-0.7-per-cent value change across the data set. Factoring in the continuing slight improvement in cash flows, appreciation levels finally crossed the divide, turning positive in each of the main sectors except office.

Key highlights by sector include:

• Industrial -- continues to be the strongest performer with values up 0.5 per cent over Q1 2024; cash flow gains for this sector added 1.1 per cent to values, balancing out a relatively small negative yield impact of minus 0.5 per cent;
• Office -- a minor downward revision in projected cash flows, along with a larger-than-average yield increase, resulted in further writedowns with values declining by 0.8 per cent over Q1 2024;
• Retail -- values turned positive in the second quarter, up 0.2 per cent, but with mixed results across property types; Parks and warehouse properties were the top performing with values up 3.1 per cent, followed by supermarkets (0.3 per cent); there were minimal writedowns among shopping centres (minus 0.6 per cent) and high street assets (minus 0.1 per cent);
• Residential -- cash flow upside of 0.6 per cent cancelled out a comparatively minor yield offset of minus 0.4 per cent, resulting 0.3-per-cent increase in value over Q1 2024.

For detailed review of the sector trends by asset class, please visit Altus Group's insights articles on the company's website.

About Altus Group Ltd.

Altus Group is a leading provider of asset and fund intelligence for commercial real estate. The company delivers intelligence as a service to its global client base through a connected platform of industry-leading technology, advanced analytics and advisory services. Trusted by the largest CRE leaders, Altus Group's capabilities help commercial real estate investors, developers, proprietors, lenders and advisers manage risks and improve performance returns throughout the asset and fund life cycle. Altus Group is a global company headquartered in Toronto with approximately 2,900 employees across North America, EMEA (Europe, the Middle East and Africa) and Asia Pacific.