European Investment Booms With 25% Year On Year Increase
·€74bn invested in European real estate in Q2 2017
·UK investment volumes rebound reaching almost €23.5bn in Q2 2017
·Considerable investment appetite focused on opportunities in the Irish market with spend hampered only by a shortage of core product
London, 20th July 2017 – Total real estate investment in Europe reached €74bn in Q2 2017, representing a 25% increase on the same period last year, according to the latest report from global real estate advisor, CBRE. This brings total investment in real estate in H1 2017 to €130bn, a 13% increase on H1 2016.
The strong quarterly performance was, in large part, driven by an upturn in UK trading activity with volumes reaching €23.4bn in Q2 2017, up from €16bn in Q1 2017, and a 54% increase on the same period last year. The sale of Logicor in Q2 did have substantial UK exposure but even if this large transaction were to be excluded, investment volumes would still be trending up year on year, as market activity continues to recover from the slowdown immediately preceding and following last year’s European Union referendum.
Germany once again proved to be the driving force behind investment growth in Continental Europe which, as a region, posted 15% growth on the same period last year. In Germany, transaction levels for H1 2017 increased by 49% compared to H1 2016, transacting €13.9bn in Q2 2017 and €26.5 for the first half of 2017. The Southern European markets of Italy and Spain, as well as the Netherlands, also witnessed strong investment growth over the quarter, posting 110%, 76% and 38% increases respectively. In France, the results for the first half of 2017 were somewhat muted; however the election of Macron in May will likely have a positive impact on occupier and investor sentiment, and the investment pipeline has strengthened going into H2 2017.
Q2 2017 was driven by robust growth in the industrial and logistics sector and, to a lesser degree, the alternative sector, as investors look to diversify their asset base. The industrial sector witnessed a 303% increase on the same period last year (which can in part be attributed to the sale of the Logicor portfolio) whilst the alternatives sector posted a 20% increase. Meanwhile, office transactions across Europe in Q2 2017 were down 6% on Q2 2016.
Investment spend in Europe in the first half of the year has been very impressive and it is interesting to note that after a relatively slow start to the year, the UK has seen a significant recovery in investment volumes in Q2 2017. Despite ongoing political uncertainties, the UK remains a pre-eminent market, attracting significant European and global capital. In addition, the Continental European markets continued to perform strongly in the second quarter of 2017 with Germany once again proving a major focus for capital and demonstrating its status as a safe haven for global wealth. Although considerable international investor appetite remains focused on opportunities in the Irish market, there has been a lack of sizeable lot sizes offered for sale so far this year. Spend in the Irish market therefore slowed somewhat in the first half of 2017 although this trend is expected to change in the second half of the year considering the volume of transactions underway at present and the number of investment properties that are expected to be launched for sale in the Autumn. With a healthy economic backdrop, very strong occupier market fundamentals and the potential for further yield compression, we expect to see continued appetite for Irish investment opportunities.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.