European Real Estate Investment Refuses to Lay Down

Europe has took a bloody beating at the hands of the financial crisis, many doubt it will ever be the same as it was before. Real estate investment in the continent has continually refused to roll over and play dead.

Europe has took a bloody beating at the hands of the financial crisis, many doubt it will ever be the same as it was before. Real estate investment in the continent has continually refused to roll over and play dead.

The sector ended 2012 with somewhat of a flurry and this continued into Q1 when investment volume increased by 28% year on year according to the latest figures from Jones Lang la Salle

According to the report France, Germany and the UK continue to dominate Europe and Lonodon, Paris and Moscow even ranked inside the global top 10 on investment volume -- the three attracted USD 11.5 billion out of the total USD 40 billion. Over 50% of transactions in these three cities was cross-border, as overseas investors sought to gain exposure in the largest European markets.

Richard Bloxam, Head of European Capital Markets at Jones Lang LaSalle explained: “Buyers are scrambling for opportunities in the largest European commercial real estate markets and this strong competition for the best product means we have seen a widening of search criteria, including location, asset class and risk level. The GBP 142 million acquisition of One Angel Square in Manchester by RREEF Real Estate demonstrates investors will now consider regional opportunities that previously they might not have considered. This trend will increase throughout the rest of the year as supply in the largest city markets remains restricted and as debt finance restraints continue to ease.”

Investors might be having to search wider, but the market continues to be driven by transactions involving large assets. According to the report transactions worth more than 100m Euros increased by 59% year on year in Q1 totalling 16 billion Euros, well above the 11 billion  5 year average of 11 billion. This also took the average lot size up from 40 million Euros last year to 47 million Euros in Q1.

Commenting on international capital, Matt Richards, Head of International Capital Group – Europe, at Jones Lang LaSalle said: “Despite on-going discussions over its fiscal position, a buoyant US stock market is driving strong purchasing activity in Europe. USD 3 billion came into Europe from North America in Q1 2013, a similar level to the amount invested in Europe from the Middle East. No amount of disappointing economic data seems to halt the steady flow of money targeting attractive yields on offer from European real estate.”

- Wednesday 15 May 2013

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