Investors from the US and Canada are the driving force behind European cross-border investment. According to research conducted by CB Richard Ellis (CBRE), nearly one-third (30 per cent) of all commercial real estate transactions on the continent were carried out by North American investors in 2011, up from around one-fifth in 2010. The UK was one of the main targets over the course of last year, attracting 18 per cent of the cash ploughed into the sector from this demographic. CBRE pointed out non-European investors accounted for 17 per cent of all cross-border activity on the continent in 2011, up from 13 per cent in the previous 12-month period.
The organisation noted both US and Canadian pension funds are "becoming more aggressive" in their investment strategies, which is helping drive money into European property markets. Jonathan Hull, Europe, Middle East and Africa head of capital markets at the firm, explained Canadian investors tend to have a significant domestic portfolio and are now aiming to diversify their holdings. He added certain asset managers from the US are targeting distressed property investments, "leading to riskier but higher returns". Real estate investment trusts (REITs) are set to become a more popular route into the European commercial property sector, too. Mr Hull commented: "It's the emergence of REITs that American investors are looking to use to gain exposure to Europe and [they] will be an important driver of growth in the coming months."
Last month, Jones Lang LaSalle published its Global Capital Flows report, which revealed cross-border investment activity increased significantly in 2011 compared to 2010. The value of such property investment deals hit nearly USD 125 billion (GBP 79 billion) last year, a 47 per cent increase over the previous 12 months. Arthur de Haast, lead director of the international capital group at the firm, described the figures as "a firm indication that investors are prepared to increasingly look outside their own countries for suitable opportunities when macro circumstances allow".
- Tuesday 06 March 2012