Middle East and North American investors are the major drivers of increased activity in the European commercial real estate market and buyers from outside the region now account for more than a quarter of all transactions in H1, 2013, according to the latest data by CBRE, a global real estate consulting firm.
Investors from the Middle East increased investment activity, accounting for 9 percent of the entire market and 21 percent of cross-border transactions in H1 2013. Capital from the Middle East is generally institutional in nature, with nearly half of the total coming from the region’s sovereign wealth funds. Transactions from Middle Eastern buyers show a strong bias towards London (nearly 50 percent of the total) and offices, although there were several large retail properties among the purchases made.
“London remains the destination of choice for foreign investors due to its solid growth potential and its status as a global financial hub, alongside its stable political environment and a transparent legal system, which are key for international and regional buyers alike,” said Nick Maclean, MD, CBRE Middle East.
Buyers from North America accounted for a steadily increasing share of the market (13 percent of the entire market and 24 percent of cross-border transactions in H1, 2013). This could have a significant effect on the dynamics of the property market as US investors, which make up the vast majority of activity, typically look at a more diverse range of markets.
The total value of commercial real estate investment activity in Europe continued to grow in Q2, 2013 at 6 percent higher than the total for Q1, 2013. The 32.6 billion euros recorded over the quarter shows a 22 percent increase on the same quarter last year and is the highest Q2 total since 2007 (before the financial crisis).
The level of cross-border investment in Europe continues to increase, both in absolute terms and as a proportion of the market as a whole. Over the first half of 2013, foreign buyers accounted for 44 percent of all transactions (by value) compared to 40 percent in the second half of 2012.
A significant change has developed in the sources of cross-border real estate investment, with intra-European investment (where the buyer is from another European country) accounting for just 16 percent of transactions in H1, 2013. This percentage had been holding steady at around 20 percent of the market throughout 2011 and 2012.
Investment capital from outside Europe is becoming increasingly important to the market and now accounts for 28 percent of all transactions in H1, 2013 (from 19 percent in H2, 2012). Even within this group of non-European investors, there has been a marked change in the sources of capital.
Within Europe, German investors remain the largest group of cross-border buyers; the open-ended funds continuing to be active buyers around Europe with acquisitions totaling well over 1 billion euros in H1, 2013. The German ‘Spezial’ funds are also active, but their acquisitions have been strongly focused on Germany in the first half of this year, stated the CBRE report.
ME, North American buyers drive European property investment market
