Spain, Ireland and Europe’s recovering markets continue to improve
May 23, 2014
Spain, Ireland and Italy all saw year-on-year increases in investment activity in Q1 2014 as investors continue their climb up the risk curve. While London still attracts a significant amount of capital, growth is much more dynamic in destinations with higher risk/yield profile. Eurozone peripheries and Central Europe will all benefit from this influx of new money throughout the year, according to the latest research from global property advisor CBRE.
The UK recorded €12.4 billion worth of transactions in Q1 2014 - up 5% on the same quarter last year. Nearly three-quarters (74%) of this total was made up of properties outside Central London - up from 61% in the previous quarter and marking the highest proportion recorded since Q4 2011. About €1.2 billion worth of transactions by foreign investors took place outside Central London in Q1 2014, including nine transactions from Asian and Middle Eastern investors, five of which were greater than €12 million. Non-European capital has increasingly spread into regional UK cities since the bottom of the market in Q2 2009 more than doubling market share from 7% to 18% in Q1 2014.
“London was targeted by a wealth of cross-regional investment at the end of last year, in particular buyers from Asia and the Middle East who were keen to acquire prime assets in one of the world's leading cities. The fierce competition has led to a shortage of available stock in Central London; therefore, investors are turning their attention to the UK’s major regional cities such as Edinburgh and Manchester”, Jonathan Hull, Managing Director, EMEA Capital Markets, CBRE, commented.
The European commercial real estate investment market overall started the year strongly with €38.9 billion in Q1 2014 - up 21% on Q1 2013. This is the highest Q1 total since 2008. However, following an exceptionally robust Q4 2013, the Q1 2014 total was well below last quarter’s €62.4 billion. Nearly three quarters of the entire European commercial real estate investment market is made up of the top four markets: the UK (32%), Germany (25%), France (9%) and Sweden (7%).
Spain, Ireland and Italy all saw year-on-year increases in investment activity in Q1 2014 as investors continue their climb up the risk curve. Spain has edged its way back, recording €988 million in turnover and taking up an increasing share of the European investment market (3%). Ireland (2%) recorded its highest quarterly total since 2006 at €939 million.
“This is in line with our previous expectations.” – added Tim O’Sullivan, Head of Capital Markets at CBRE Hungary. While London still attracts a significant amount of capital, growth is much more dynamic in destinations with higher risk/yield profile. Regional UK destinations, Eurozone peripheries and Central Europe will all benefit from this influx of new money throughout the year. Stabilisation in the CEE markets is bring new investment and with it new equity that hasn’t been present before.”
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