Daily Management Review

Commercial real estate investment in Europe peaked in 2016


In the fourth quarter of 2016, CBRE’s analysts noticed record high quarterly rate of investment in commercial real estate in Europe. The figure amounted to € 86.8 billion, which is 5% more than in the IV quarter of 2015.

Ian Muttoo
Ian Muttoo
The German market, with € 19.8 billion of total transactions volume, was the leader of the reporting period. The Netherlands experienced the largest annual growth ever recorded in the history - volume of investments increased by 17% yoy to € 13.5 billion.

Total investment activity in 2016 amounted to € 251.1 billion, which is 10% lower than in 2015 due to less fruitful first half of the year. Excluding the UK, total investment for the year increased by 5%, from € 182.7 billion in 2015 to € 190.9 billion in 2016. Uncertainty in the UK market in connection Brexit, as well as other factors, including turbulence in the financial market of China, led to less activity in the global capital markets. This, in turn, caused an investment bust in all EU countries. Contrary to the general market conditions, the UK industrial sector was ranked first in terms of growth along with other European countries, where annual volume of investments grew by 4%.

Germany also showed good performance. Thanks to record levels of the fourth quarter (€ 19.8 billion euro), annual investment turnover exceeded € 50 billion euros. The country is considered one of the most popular real estate investment markets in the world. Main assets in Germany are still highly sought after as a safe haven.

Volume of pounds sterling investments in the UK market in 2016 decreased by 28% (by 37% in euro) compared to 2015. This difference reflects effects of the weakening pound, observed after the Brexit referendum in June 2016. 2015 was a record year in terms of total volume of investments in real estate in the UK, which amounted to € 94.8 billion. As the pound sterling was weakening during 2016, foreign capital showed active interest to British real estate. The market became much more appealing for of capital denominated in currencies other than the pound. Real estate continues to offer significant advantages compared to bond yields, and fundamentals of real estate markets such as the UK and continental Europe remain attractive. Investments in the UK increased slightly in quarterly terms - from € 11.9 billion in the III quarter to € 15.1 billion in the IV quarter of 2016.
source: cbre.com

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