Full impact of Covid-19 felt across Europe in Q2 2020

Total real estate investment in Europe reached EUR43 billion in Q2 2020, representing a decrease of 39 per cent on the same period last year, according to the latest data from global real estate advisor, CBRE. This brings H1 2020 investment volumes in Europe to EUR129 billion, a 2 per cent increase from EUR127 billion for the same period in 2019.

Whilst Q2 investment volumes fell significantly as the impacts of the Covid-19 pandemic were fully realised, investment volumes in Q1 2020 reached an all-time high due to a number of large transactions in Germany, the UK and The Nordics. This has ensured that H1 2020 investment volumes have remained in line with the previous year. In Continental Europe (excluding the UK and Ireland) investment volumes for H1 2020 were up 6 per cent on the same period last year but down 34 per cent on Q2 2019.

Whilst Q2 volumes were down across the region, Germany, Austria, the Netherlands, and CEE outperformed the 39 per cent decline for Europe, recording more moderate declines of 20 per cent, 17 per cent, 23 per cent, and 23 per cent respectively.
 
On a month by month basis across Europe, May was most severely impacted by the various Government-imposed lockdown measures and witnessed a significant decline in transaction activity. June saw a slight uptick as travel restrictions and lockdown measures began to be relaxed. This upward trend in volumes is expected to continue as Europe’s economy continues to recover.
 
At a sector level, Logistics and Multifamily assets outperformed other sectors as investors sought stable income streams amid increased economic uncertainty. Consequently, Multifamily investment is closing the gap with Offices, which remained the largest asset class. Year-to-date investment volumes into Multifamily reached EUR33 billion, up 37 per cent on the same period last year and investment into Logistics reached EUR15 billion in H1 2020, a 5 per cent increase on the same period last year. Meanwhile Offices have seen transaction volumes of EUR41 billion since the start of the year, representing a decrease of 16 per cent on H1 2019.
 
Retail continued to prove challenging, with volumes falling 25 per cent in Q2 2020. However, investment volumes were up 16 per cent for H1 2020 due to a strong performance in Q1 2020 as a result of a number of large portfolio transactions. The first half of 2019 also saw lower-than-usual retail volumes.
 
Chris Brett, Head of EMEA Capital Markets, CBRE, says: “Despite many countries across Europe entering into lockdown in early to mid-March, the true impact of the pandemic was not reflected until Q2, with May recording the greatest decline in activity. However, the uptick in investment we saw in June as restrictions began to be eased points to the start of a recovery. There is an abundance of capital ready to be deployed as limitations continue to be relaxed and we have seen very little movement in pricing for prime assets, particularly in the major gateway cities.”