Europe's leading brokers recorded big jumps in their transaction advisory volumes as they surfed the crest of the €230 bn investment wave that washed over the European real estate market last year. The question is whether they can keep their balance in an ebbing tide.
After years of running neck and neck with its closest rival JLL, CBRE has emerged as the clear winner of PropertyEU's annual ranking of the Top Brokers in Europe.
CBRE takes first place after having captured €56.3 bn of the European business in 2015, 22% more that JLL's total of €46.2 bn. The gap is significant as there has not been so much clear water between the two largest brokers since 2008, when PropertyEU recorded a volume of €53.6 bn for CBRE and €40 bn for JLL. In the following six years, they shadowed each other, with JLL having the edge in 2012-2014.
While most of the brokers in our ranking recorded growth in their transaction advisory volumes of between 20% and 57%, the two New York-listed rivals remain well ahead of the rest of the pack in Europe. The ranking is based on advisory services on investments in lot sizes of above €20 mln - either on the buy or sell side - out of a total volume for the year of €230 bn.
Cushman & Wakefield - the perennial number 3 in Europe - reported 57% growth in volumes to €23.5 bn. The result was enhanced by three months of figures from DTZ, which completed the merger with C&W in September 2015. The big leap was enough to see off a challenge for third place from BNP Paribas Real Estate, which saw 29% growth to €17 bn.
Pan-European expansion
The brokers' volumes were powered by increasing deal volumes across Western Europe and the Nordics, with only Central and Eastern Europe showing a decline. CBRE has increased investment volume handled in all Western European regions, but more in some than others. While it increased volume by 43% in the UK and by 68% in Germany, the figure for Spain and Italy soared by 99%, albeit from a low base.
In its report on the European markets in 2015, JLL says that US investors actually spent 9% less in Europe than in 2014 in dollar terms, but the weakness of the euro meant this translated into 8% growth in local currency and with all major markets experienced significant gains. The total investment volume was $253 bn (€230 bn). JLL found that Germany and the Nordics were the standout performers with almost 30% growth.
So much for 2015. This year is being shaped by new opportunities and challenges, not least of which has been the spectre, now reality, of the UK 'Brexiting' the European Union at some yet-to-be defined future date.
Ebb and flow
Investment activity already started taking 'a pause for breath' at the start of the year, according to Cushman & Wakefield. European investment activity totalled €45.6 bn in Q1 2016, 14% down on Q1 2015, and 15% below the three-year quarterly average. Nevertheless, head of EMEA capital markets research at Cushman & Wakefield Nigel Almond observed investment activity continues to grow across Europe on a year-on-year rolling annual basis. 'The UK continues to attract the biggest share of activity, however this share has ebbed away as investors explore opportunities in other locations. As such, the strongest growth in volumes has been located elsewhere in Europe.'
Nevertheless, the volume growth seen to date on the Continent will be insufficient to offset the weakened UK. In Germany, too, volumes for the first half of the year were down 26% on H1 2015 while France saw only modest growth of 2% in the same period.
Aside from Brexit, there are a number of European elections on the horizon that could deter investment in the coming period. Brokers will have their work cut out for them to repeat their strong 2015 performances in the coming 12 months.
Paul Strohm
Senior Editor
PropertyEU's latest Top Brokers ranking and special report is published in the October edition of PropertyEU Magazine
