Direct investment into commercial real estate in Europe, Middle East and Africa rose three percent to €123billion (US$159billion) in 2012, boosted by the strongest quarter since 2007 (€46b in Q4 2012 vs. in Q4 2007 €53b), according to new research from Jones Lang LaSalle.
“The strong end to the year illustrates that investors remain attracted to real estate opportunities, especially in the UK, Germany, France and Sweden. Interestingly, there was also a marginal increase in activity in markets such as Ireland and Spain during Q4 2012 which signals increased momentum for 2013. While much has been made about the increasingly globalisation of capital flows, the strength of the domestic market should not be overlooked. German, French and UK investors were the largest gross investors in Europe over the last year,” Richard Bloxam, Head of European Capital Markets at Jones Lang LaSalle said.
“The office sector had a stellar year in 2012, with activity increasing 24% year-on-year; almost 60% of office activity in 2012 was within London, Paris and the German Big 5 cities. This has helped consolidate London and Paris’ position as two of the top 10 traded cities globally, with London holding onto top spot in 2012. Despite on-going demand for good quality shopping centres as evidenced by several large deals in Q4, retail investment volumes over the full year 2012 were down year on year due to a limited supply of appropriate product,” Richard Bloxam, added.
“In 2012 we recorded a 36% increase in net investment into Europe by investors based outside of the region compared to 2011. The largest growth originated from Asia, where purchases into Europe grew by a staggering 80% year on year,” Matthew Richards, Head of International Capital Group Europe said.
“We expect Asian offshore buyers to be many of the dominant sources of new capital this year and beyond as domestic regulations now allow investment outside of their domestic real estate market.”
“We are forecasting global volumes could reach $500billion in 2013 from US$443billion in 2012, due to increased levels of demand for real estate coupled with a strategic reallocation towards this asset class by institutional investors. The Europe, Middle East and Africa region is expected to maintain similar volumes in 2013 to those achieved in 2012.”