EUROPEAN REAL ESTATE INVESTMENT GROWS TO €23.5B IN Q2 2010
INVESTMENT VOLUME IN IRELAND SHOWS ONE OF THE LARGEST QUARTERLY INCREASES - BUT FROM A LOW BASE
London, 14 July 2010 – European commercial real estate investment turnover reached €23.5 billion in the second quarter (Q2) of 2010, a 15% increase on the €20.3 billion transacted in the first three months of 2010, according to the latest data from CB Richard Ellis (CBRE). 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.
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Investors continue to predominantly focus on the core assets, predominantly at the prime end of the market, with the largest, most liquid markets seeing the most activity. As property investors’ concerns over issues of sovereign debt grew during Q2 2010, the flight to quality seems to have intensified even further. Q2 2010 investment activity remained concentrated in the UK, Germany and France, which together accounted for 62% of the European investment total. France saw the highest growth of the three markets, with a quarter-on-quarter increase of 46%. The UK market saw an increase of 24% in investment activity in Q2 2010.
Of 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.
A 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.
Andrew Gunne, Director at CB Richard Ellis, Ireland said: “With a growing number of larger transactions in Europe, we are 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”.
He added “As turnover improves across Europe generally, it is reassuring to see that turnover in the commercial property investment sector in Ireland in the first 6 months of 2010 was in excess of total turnover for 2009 although levels remain very much subdued at €103 million and €92 million respectively. There are a number of European investors looking at Ireland as a recovery play, however, a lack of liquidity in the market continues be an obstacle to these buyers entering into the market. In saying this, we are aware of another €450 million of deals in the pipeline that are due to sign so the market appears to be loosening up slowly. As Ireland's economy inevitably improves, so will its attractiveness to international buyers and transaction volumes will increase further”.
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About CB Richard Ellis
CB Richard Ellis 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 firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our website at www.cbre.com.
Sources: In addition to CB Richard Ellis, data for this release is drawn from KTI, Property Data and Realia Management