According to Savills, the Southern European markets of Spain and Greece have seen a significant rise in commercial real estate investment in 2014 with half year figures representing 88% of last year’s overall investment volume total, reflecting a 132% year on year increase. Following an active year in 2013, the firm notes that the Italy and Portugal markets had a slower first half in 2014, but are expected to match or even exceed last year's volumes.

Marcus Lemli, Head of Investment Savills Europe, states: “The improved economic outlook in Southern Europe combined with the increased weight of capital wanting to invest and an appetite for higher yields, have driven increased investor activity so far in 2014 with buyers not wanting to miss this opportunistic phase of the cycle.”

The firm’s research highlights that Spain has reported the largest growth in investment activity, which increased by 168% in H1 14 compared to the same period in 2013 and this is set to continue with the country predicted to report a year end figure of almost double that of last year at more than €5 billion.

Research from the international real estate advisor shows that investment levels in Southern Europe have been underpinned by buying activity from new and established REITs in these markets. In addition, Savills confirms that these investment vehicles have provided a platform for international buyers to achieve exposure in Southern Europe through indirect investments with figures showing that approximately €820 million and €2.55 billion were invested in Greek and Spanish REITs respectively by international investors in the past 12-18 months.

Eri Mitsostergiou, director of European Research at Savills, comments: “REITs have provided a safe and efficient investment structure for overseas purchasers to enter the Southern European commercial real estate markets. In some cases, these investors do not know the local market well and the REIT vehicle provides them access to domestic players that are better positioned to expand and deliver effectively.  Meanwhile REITs across Southern Europe have firmly established themselves as key and important investors in the commercial sector and this is something we expect to increase as these markets continue their recovery.”


Of the transactions completed so far in Spain in 2014, 21% was dominated by the new Spanish REITs (SOCIMIs) who have this year invested 44% in retail, 42% in offices, 8% in hotels and the remaining 6% in industrial. Madrid accounted for 52% of the SOCIMIs investments with Barcelona seeing 35%.

In the Greek market the REITs, known locally as AEEAP, have accounted for 38% of investment activity over the past 18 months with offices representing 84%, retail accounting for 12% and the remaining 4% allocated to industrial.

In Italy just two REITs (SIIQs) currently exist however Savills indicates that a change in regulation in the country promoted by the ‘Unlock Italy’ initiative as well as a focus on attracting foreign investment into the Italian real estate market, may spur IPO activity and the creation of more REITs, similar to the Spanish market. This increase in Italian REITs could open up opportunities for those international investors that may consider Italy to be a complex market to enter.

In the office market the average CBD yield for Southern European capital cities is 6.8% compared to a 5.3% average across Europe, while the average prime shopping centre yield is over 7.2% compared to a European average of 5.8%. Looking forward the firm expects the total commercial investment volume across Italy, Spain Portugal and Greece to increase by approximately 30% year on year by the end of 2014 to reach €10.2 billion.