The report says that the implications of June’s announcement are generally positive for commercial real estate.

Damian Harrington, Regional Director of Research for Colliers International, Eastern Europe, said “A lower policy rate means that recent headlines about yield decompression on the back of a rate rise has all but diminished for a 4-5 year planning horizon.

Even then movements are likely to be done in small increments and as long as the liquidity premium traditionally held on commercial real estate is not eroded too much, any policy movement ought to be manageable.”

Low policy rates, and by extension low bond rates, implies that the search for yield will continue in the near term. There are indications that some property market yields are getting too hot in the current cycle, with some owners simply cashing in.

“If the ECB continue to push rates lower, the scope for further yield compression is a possibility,” Damian Harrington said.

As banks are becoming more liquid they have become more active in the commercial real estate lending market. It might be a bit premature to say there will be a complete turnaround but more competition from lenders should encourage slimmer margins and higher loan-to-value ratios.

 Exports will keep the momentum in industrial/warehousing demand at its current pace and may also add occupier volume to office markets. By discouraging consumers to save by avoiding deflation and keeping saving rates low, retail markets should also receive a boost.