European investment volumes could top €230b mark in 2015 - DTZ

Investment in European commercial real estate is on course to top €230 bn for the full-year 2015 after a strong first quarter, according to figures released by DTZ.

A total of €51.4 bn was invested in the first three months of 2015, a 40% increase on the same period a year ago. Volumes over the last four quarters totalled €208 bn, exceeding the €200 bn mark for the first time since 2007.

DTZ’s Investment Market Update for Europe also indicates that the market is broadening, with the core three markets of the UK, France and Germany accounting for 65% of all activity compared to 74% a year ago.

Spain and Italy saw triple-digit growth as massive amounts of capital flowed in, while the Benelux and the Nordics markets grew by 93% and 48% respectively.

Domestic investors maintained a 50% market share, while European and non-European investors each represented 25% of volumes. While activity by non-European investors slowed marginally, the weakening euro encouraged strong inflows from the US, while Asian and Middle Eastern capital remained strong.

Offices remained the dominant sector with 39% of market share, though this is the lowest level since 2011. Volumes in the retail sector reached a record quarterly level of €18 bn, driven by pan-European shopping centre portfolio sales.

Magali Marton, Head of EMEA Research at DTZ, said: ‘Investment activity in Q1 was dynamic and shows a changing landscape. While the UK and France saw 36% and 34% volume growth compared with a year ago, Germany’s €9bn of transactions was stable and the real story was elsewhere thanks to increasing variety in investment destinations.

‘Commercial real estate remains attractive despite on-going yields compression and there is EUR125bn of new capital targeting the region. This will lead to market activity increasing with the likelihood that investment this year could surpass its previous peak of €230bn in 2007.’