Chinese biggest net buyers in 2015, says C&W

Chinese investors were the biggest net investors in European real estate last year, according to Nigel Almond, head of capital market research at Cushman & Wakefield.

‘Chinese players carried out almost no sales in 2015 and were behind around €3 bn of European acquisitions,’ Almond said. However, taking into account transactional activity as a whole, North American investors were by far the largest foreign investor group representing around €16 bn of activity. Investors from Singapore, Qatar and the United Arab Emirates were also strongly active over the year which also saw the entry of Taiwanese investors into the market with around €2 bn of activity.

Non-European investors saw their market share grow to a record share of 32% or nearly a third of all capital flows into Europe’s commercial real estate, which amounted to €245 bn in 2015, more than the record level of 2007, according to C&W’s research. European cross-border activity was also at a record level, with a 42% share, largely driven by regional investment in the Nordics and into Germany.

In terms of investment destinations, Germany was by far the winner of the year with €33 bn of deals closing in the market. Countries in the periphery such as Spain, Italy and Ireland also showed a good level of activity, with volumes rising by 44% from €17 bn in 2014 to €25 bn in 2015.

The UK remained the most active market with a share of 34% or €85 bn of deals, an absolute record. However, this represented a decrease from 38% a year earlier, added Almond. ‘The UK was ahead in recovery and captured most of the capital flows but more recently Europe has been catching up and that money is being spread across the Continent.’

In terms of sectors, retail was the winner of the year, with a record investment of €69 bn, or a 45% rise year-on-year. The UK and Germany with a market share of 28% and 25% respectively represented over half of Europe’s retail activity in 2015.

Looking ahead, C&W’s head of EMEA research Magali Marton believes demand will continue to drive volumes higher. ‘Even with yields at record lows, real estate still offers an interesting spread compared to other asset classes including bonds.’ The broker expects that activity will continue to rise in 2016, although by a modest pace of 8%, which should drive volumes to around €266 bn by the end of the year.