New data from JLL has revealed that investment volumes for the EMEA region reached over €68 bn for Q3 2021, up 26% year-on-year.
Year-to-date values rose to €191 bn, as the market continued its post-pandemic recovery.
Global deal flows reached $292 bn for the quarter, up 77% from last year. That allowed year-to-date volumes to reach all-time highs at $757 bn, up 50% year-on-year globally.
Living most liquid
The data also revealed that living has become the most liquid asset class in the world, accounting for $219 bn of investment year-to-date, an 80% increase over 2020 levels and 36% over 2019. It represented 29% of all global deals.
Activity has largely been concentrated in the US -representing 72% of global living investment in 2021 - but global volumes are increasingly supported by growing living investment across Germany, the UK and France.
Japan continues to see strong interest from cross-border capital with international buyers representing more than 30% of living investment year-to-date.
EMEA highlights
In EMEA, living sector deals accounted for 26% of the total investment volumes.
Industrial & logistics and multifamily exhibited strong growth in Q3 across EMEA, with volumes up 59% and 31% respectively.
Germany was the key driver for performance, with year-to-date volumes showing a rise of 22% year-on-year to €50 bn, closely followed by the UK, which recorded volumes of €48 bn.
Adam Challis, executive director, research and strategy, EMEA, JLL, said: 'It’s been an impressive quarter for commercial real estate, with recovery from the pandemic in full swing.
'Those sectors that remained resilient throughout the last year saw increased investment allocation and have experienced strong growth, whilst those who experienced uncertainty are also now becoming attractive again.
'We expect Germany, UK and France to perform well, which they did throughout the quarter, but we’re also seeing new highs from Sweden, Ireland, Poland and Italy, which will attract some of the well-established investors to newer markets throughout the remainder of the year.'
Diversifcation
In the third quarter, investor focus on portfolio diversification remained pronounced, with an intense appetite for gaining exposure to sectors benefitting from demographic tailwinds and resilient end-user demand, including the living and logistics sectors.
In parallel, conviction is building for lagging sectors in the current recovery, including retail and office sectors.
After living assets, offices are the second-most invested asset class globally, with the industrial and logistics sector close behind. Industrial saw year-to-date investment gains of 78% year-on-year.
Total retail investment is now up 35% year-to-date (up from 31% as of H1 2021), and office activity is now up 27% year-to-date (up from 9% as of H1 2021).
Sentiment by retail asset type varies widely, but capital deployment is now expanding beyond necessity retail and lifestyle or entertainment-oriented centres, the most resilient retail assets thus far in the recovery.
Challis added: 'Despite the receding market uncertainty, there is no shortage of capital and we’re seeing real innovation in how it is being allocated towards real estate, with a rise of joint ventures and M&A activity.
'The potent mix of suppressed M&A activity last year and abundant dry powder is beginning to spark an extended period of deal making and M&A activity, which is something we should look out for during the next quarter and going into next year.'
