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Commercial property investment spikes in Europe

Research released by Knight Frank in its European Quarterly Commercial Property Outlook (Q3 2017), proves a strong third quarter last year has put 2017 European investment volumes on course to beat 2016.

In fact, a total of EUR47.4 billion was invested in European commercial property in the third quarter (Q3) 2017; a 13 per cent increase on the same quarter of 2016.
Inspired by the strong performance in Q3, which took European commercial investment volumes for the first three quarters of 2017 to EUR144.4 billion, up by 3 per cent year-on-year, commercial property specialists, Savoy Stewart sought to uncover the countries stirring the most interest in investment in Europe.
In analysing the figures, Savoy Stewart found several countries experienced a spike in commercial investment in 2017. Most notably in Finland, with a total investment of EUR5.6 billion, Q1-Q3 – a rise of 121.60 per cent on figures from 2016.
Hungary (89.90 per cent), Romania (73.50 per cent), the Czech Republic (43.30 per cent) and Netherlands (41.70 per cent) followed, with considerable increases measured.
Though missing out on the top ten for highest commercial investment volumes, the UK received a gargantuan EUR37.6 billion in commercial investment, Q1-Q3 2017, which accounts to a 2.80 per cent rise on 2016.
Indeed, the recovery in UK volumes has been primarily driven by the sale of large assets in London to overseas buyers, particularly in Hong Kong. Including a single EUR1.4 billion deal – the largest noted in the third quarter of 2017. The UK’s position as a strong contender in commercial property therefore, should not be overlooked. Particularly as other European locations experienced catastrophic falls in commercial investment volumes, the top 3 identified as Ireland (-58.30 per cent), Sweden (-38.60 per cent) and Switzerland – with an average -35.50 per cent fall in investment figures.
Darren Best, managing director of Savoy Stewart, says: “This rise and fall could reflect how investors are beginning to look toward locations outside of populist countries; places which may offer a renewed energy and stability to commercial business in uncertain times.
I believe the top ten countries will certainly be commercial locations to watch in 2018. But what is also crucial to note, is that investment in commercial property in Europe is thriving, overall – and the UK plays a large part in that.”
Furthermore, Savoy Stewart discovered the top five preferred sectors for investors in 2018 are Logistics and Industrial (51.0 per cent), Specialist – including automotive/student/healthcare – (28.3 per cent), Office at 15.2 per cent, Hotel (3.4 per cent) and Retail with 2.1 per cent.
58.9 per cent of the same investors believe there will be a “stronger demand” for commercial property in Europe in 2018, while 31.5 per cent claim there will be no change and 9.6 per cent agree the demand will be weaker.

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