Report highlights upturn in European commercial real estate investment
Significant increases in real estate investment turnover in the UK, Germany and Spain in the third quarter of 2009 propelled an upturn in the European commercial real estate investment market, according to the latest data from CB Richard Ellis Group.
European investment activity in Q3 2009 totalled €17.3bn, a 34% increase on Q2 2009 and the highest quarterly result so far this year.
Despite the quarterly increase, in year-on-year terms the Q3 2009 total compares with the €30bn investment turnover recorded in Q3 2008.
The UK and Germany, in particular, saw some of the sharpest improvements, both reporting increases of more than 50% in investment activity compared with Q2 2009.
While investor interest in Germany remained local and stayed firmly fixed on the prime segment of the market, the situation was rather different in the UK. Investors in the UK have started to see value across a wider product range and have become increasingly prepared to take additional risk by investing in more secondary product.
Spain was another major western European market to see a prominent increase in activity in Q3, with €1.5bn worth of transactions – a 44% increase on Q2 2009.
Transactional activity in the Irish investment market remains weak however, with only approximately €29.5m invested domestically during Q3 2009, bringing total investment spend in the first nine months of the year to just over €71m compared to approximately €465m in the first nine months of 2008.
Another new development in the European market in Q3 2009 was the completion of two €1bn+ deals – marking the first time since Q3 2008 that deals of this size have been transacted.
One of these was British Land’s €1.2bn sale of the Broadgate Estate office complex in the City of London to American opportunity fund Blackstone Real Estate.
The other was Spanish bank BBVA’s €1.15bn sale and leaseback of a portfolio of mainly bank branches located in Spain.
These transactions are important to note given the sharp fall in average transaction size post Lehman’s collapse. The largest transaction in Europe during H1 2009 was the sale of the former Dawnay Day portfolio in the UK for around £600m (€669m).
There were only 36 transactions of over €100m in Europe in H1 2009, a trend which is starting to reverse as deals for more than €100m became much more commonplace in Q3 2009.
