European Real Estate Investment grows to €23.5 B / Q2 2010

Investment turnover rose despite the stress factors emerging in the broader capital markets, such as the sovereign debt crisis and the introduction of austerity measures by many European governments.

Investors continue to predominantly focus on the core assets, predominantlyOf the 27 markets covered, some of the smaller European countries, such as Austria, Ireland and Czech Republic, reported the highest quarterly increases, albeit from a very low base. However, whilst not yet fully reflected in the level of the actual deals closed, Poland and the Nordic region - Sweden in particular - are starting to emerge as a focus of strong investor demand.  

Michael Haddock, Director of EMEA Capital Markets Research, CB Richard Ellis, commented: “The increased interest in the Polish and Nordic markets should not be seen as coincidence, but as evidence that investors are recognising the robust fundamentals. In light of downward pressures in most markets, low government deficits and a consequent lack of government spending cuts, these markets look very favorable.”

Another notable feature of the European investment market in Q2 2010 was the growing number of large deals. In Italy, for example, the €440 million acquisition of the Porta di Roma shopping centre by Allianz Real Estate accounted for a third of the country’s Q2 2010 activity. In some markets, however, there has been a genuine increase in large deal liquidity. Germany stands out, with 13 €100 million-plus deals reported in the first six months of 2010. This performance runs alongside the UK, which has been in recovery for longer and where 25 €100 million-plus deals were reported in the first half of this year.

Jonathan Hull, Executive Director of EMEA Capital Markets, CB Richard Ellis, said: “With a growing number of larger transactions in Europe, we are also starting to see an increase in cross-border activity. This is already evident in Germany, where cross-border investment grew to 44% of the market in H1 2010, compared to only about 10% in H2 2009. The same is true of the UK, and Central London, in particular, where most buyers of €100 million-plus properties have been international. Middle Eastern and overseas investors have been particularly prominent this year, concluding a number of large deals, including the purchase of Knightsbridge Estate in London for close to €660 million.”

European Real Estate Investment Activity 2Q 2010

Source: CBRE, London, 14 July 2010