European Commercial Investment to Remain High in 2014

Posted on 23 March, 2014 by Jodee Redmond

2013 saw the highest pan-European commercial real estate investment volume since 2007 with approximately €141 billion was transacted. This amount represents a 21 per cent rise over 2012 figures, according to a recently-released investment bulletin from Savills.

European-Commercial-Investment-to-Remain-High-in-2014

The vast majority (77 per cent) of the investment turnover was noted in core markets such as the United Kingdom, Germany and France.   Some secondary markets have also shown significant growth. Greece, Ireland and Italy

The strong transaction volume increase in Greece came about as the result of the sale of public assets.

Savills is predicting double-digit growth in investment volumes in Ireland. An increase of 32 per cent is expected, and Sweden is looking at 30 per cent growth. France could see an increase in volume of 24 per cent.

Similar figures are expected for Spain, where growth is anticipated to run at about 19 per cent. Ongoing interest in the market in conjunction with investors’ belief that prices have hit bottom will contribute to the strong showing.

All asset classes reported a year on year increase in transaction volume last year. The industrial sector recorded the highest rise at 27 per cent. The office sector is dominating the investment share with 47 per cent of the transaction volume, a slight decrease compared to the 51 per cent that the market saw in 2012.

Prime CBD office yields in Paris, London, as well as leading six German markets have again reached 2007 levels, with an average of 4.2 per cent by the end of 2013. Across the entire region, prime CBD office yields averaged 5.2 per cent in Q4 of 2013.

According to the bulletin, retail property yields averaged 5.8 per cent in the last quarter of 2013, compared to 6 per cent in the same period of 2012. Prime industrial yields are being recorded at 7.4 per cent. In the same period last year, yields of 7.4 per cent were recorded

The firm expects prime industrial yields to contract in about half of the markets it surveyed. The growth of ecommerce and the entry of some major players from the US and UK institutional realm into the mainland European markets will have a bearing on commercial property yields.




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