European Mega Deals on the Rise

Posted on 14 May, 2015 by Chris Grigorovsky

According to Savills Market in Minutes report, there has been an 18 per cent year-on-year increase in deals over €100 million throughout Europe in Q1 of 2015.

European Mega Deals on the Rise

The report also found that portfolio transactions increased by 23 per cent year-on-year, accounting for over two thirds of all ‘mega deals’ and 45 per cent of the total transaction volume – and the trend looks set to continue.

“We expect to see an increase in mega deals throughout 2015, especially as a result of portfolio sales which we believe will underpin investment activity going forward,” says head of European investment at Savills Marcus Lemli.

“The low interest rates and ECB purchase programme will insure demand for real estate remains high in the strong markets such as UK, Germany and France and the recovering ones such as Spain, Italy, Ireland and The Netherlands”.

The majority of the mega deals were driven by UK, US and German investors, who were involved in over half the activity in terms of numbers and deals, and 62 per cent in terms of the total value.

The office sector remains the most popular with investors, accounting for 40 per cent of total activity. However, the top UK deals during Q1 were not in the office sector, but in the increasingly popular student housing sector.

Director of research at Savills, Eri Mitsostergiou, commented: “Competitive market conditions have led to further yield compression across sectors. The average prime CBD office, shopping centre and industrial yields are all down year-on-year at 4.87 per cent, 5.3 per cent and 7.39 per cent respectively”.

“Continued investor demand, especially from the international parties and REITs which have been particularly active in Q1 2015, will cause yields to continue to harden.”

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