Savills latest European investment report states that Europe is back on the global cross-border investors' radar and these buyers are set to be key drivers of the market in 2013.
Savills latest European investment report states that Europe is back on the global cross-border investors' radar and these buyers are set to be key drivers of the market in 2013. The international real estate advisor notes that overseas purchasers have increased their presence predominantly in the UK (from 35% to 46% between 2011 and 2012), Germany (35% to 47%), Poland (90% to 96%) and France (42% to 45%), although there is a rise in appetite for the whole of Europe.
The firm notes that interest in Europe is not only coming from the continent, but also further afield with investors from Asia, the Middle East and the US expanding their requirements. New entrants of note include Latin American fund, Carso who began investing in Spain at the end of 2012 and the Azerbaijan’s State Oil fund, which has entered the French market. In addition, Savills research highlights that 2012 was characterised by a significant growth in activity from Sovereign Wealth Funds from Norway, the Middle East and Asia, which has resulted in an expanding deal size as well as an increase in the number of portfolio acquisitions.
Marcus Lemli, head of European investment at Savills, comments: “This renewed interest from European cross-border and global investors in the European markets is very positive news. While these investors are predominantly risk averse, we are seeing some attraction from opportunistic funds both in the core and peripheral markets, which we expect to continue throughout 2013.”
According to Savills research, the European investment market has remained polarised with the UK, Germany and France accounting for 74% of the total turnover (of the 13 countries surveyed*), which reached €116.9 billion in 2012 showing a 10.3% increase on the previous year. The firm notes that not only has investor interest been focussed on these three countries but the activity has increasingly been directed at a small number of cities. London, Paris, Berlin, Munich, Frankfurt and Stockholm accounted for 50% of the total investment volume, with London alone seeing 23%.
Savills has also identified a diversification in portfolios with purchasers having to look to alternative assets due to a lack of prime quality product. In particular multi-family residential and development sites along with student housing have seen an rise in interest. However, the firm’s report also highlight’s data from Real Capital Analytics which shows that offices continued to remain the firm favourite in 2012 accounting for 54% of the European commercial investment volume, followed by retail with 28%.
Lydia Brissy, Savills European research director, says: “Looking forward we expect to see some gradual improvement in business sentiment across Europe, which will support a more balanced market with activity evenly spread as peripheral countries begin to look more attractive.”
* The European markets that Savills monitors include UK, Germany, France, Sweden, Norway, Netherlands, Poland, Belgium, Spain, Italy, Austria, Ireland and Greece.