The European commercial real estate investment market had its strongest third quarter since 2007 with EUR35.5 billion in transactions – up 21% on Q3 2012, according to the latest data from global property advisor CBRE.
Commercial real estate investment in the core Western European markets – UK, Germany and France – was particularly strong in Q3 2013. Investment in UK commercial property was at the highest level since Q3 2007 with EUR14.1 billion of transactions completed in Q3 2013 - a 19% increase over Q3 2012. Germany, with EUR6.2 billion in Q3 2013, showed a 21% increase over Q3 2012. France also had its highest Q3 investment activity since 2007 with EUR4.6 billion - a 39% increase on Q3 2012. These markets also posted sequential gains compared with Q2 2013, with investment activity for all of Europe improving 7% compared with the prior quarter.
The markets that were most affected by the eurozone crisis - Ireland, Italy, Portugal and Spain - recovered strongly in H1 2013 and this trend continued in the third quarter. In Southern Europe (Spain, Italy and Portugal) commercial real estate investment totalled EUR2.2 billion in Q3 2013, up by 145% on Q3 2012. Investment activity in Ireland increased 354% over the same period. This performance shows that opportunistic investors are returning to Europe and targeting recovering markets.
Central and Eastern Europe (CEE) commercial real estate investment totalled EUR2.3 billion in Q3 2013, up 33% on Q3 2012. Activity in the CEE was led by the core markets of Russia, Poland and the Czech Republic.
Both the core and opportunistic sectors of the European commercial real estate market are in favour with investors. In Germany, France and the UK, there are still a large number of risk-averse investors focused on core markets and prime assets. However, opportunistic investors are growing in number (and spending power) and this is driving increased investment in those countries that were hardest hit by the euro crisis. In contrast, markets in countries that do not fit either of these categories, such as The Nordics and to some extent Benelux, are not experiencing the same growth in activity as those at either end of the risk spectrum.
Jonathan Hull, Head of EMEA Capital Markets, CBRE, says: “Europe showed strong investment levels in Q3 2013, led by core Western European markets and the continued recovery of Southern Europe. With nearly EUR100 billion of transactions already in the first three quarters, 2013 should post solid gains in investment activity over 2012.”