European investment volumes rise 21% in Q3

The European commercial real estate investment market witnessed its strongest third quarter since 2007 with €35.5 bn in transactions, up 21% on Q3 2012, according to the latest data from property adviser CBRE.

Commercial real estate investment in the core Western European markets - the UK, Germany and France - was particularly strong in Q3 2013. Investment in UK commercial property was at its highest level since Q3 2007 with €14.1 bn of transactions completed in Q3 2013 - a 19% increase over Q3 2012.

Germany, with €6.2 bn in Q3 2013, showed a 21% increase over Q3 2012. France also had its highest Q3 investment activity since 2007 with €4.6 bn - a 39% increase on Q3 2012. These markets also posted sequential gains compared with Q2 2013, with investment activity for all of Europe improving 7% compared with the previous quarter.

Markets most affected by the eurozone crisis such as Ireland, Italy, Portugal and Spain recovered strongly in H1 2013 and this trend continued in the third quarter. In Southern Europe (Spain, Italy and Portugal) commercial real estate investment totalled €2.2 bn in Q3 2013, up 145% on Q3 2012. Investment activity in Ireland increased 354% over the same period. This performance shows that opportunistic investors are returning to Europe and targeting recovering markets, CBRE said.

Investment in Central and Eastern Europe (CEE) totalled €2.3 bn in Q3 2013, up 33% on Q3 2012. Activity in the region was led by the core markets of Russia, Poland and the Czech Republic.

Both the core and opportunistic sectors of the European commercial real estate market are in favour with investors. In Germany, France and the UK, a large number of risk-averse investors are still focused on core markets and prime assets.

However, opportunistic investors are growing in number (and spending power) and this is driving increased investment in those countries that were hardest hit by the euro crisis. In contrast, markets in countries that do not fit either of these categories, such as The Nordics and to some extent the Benelux, are not experiencing the same growth in activity as those at either end of the risk spectrum.

Jonathan Hull, head of EMEA capital markets at CBRE, commented: 'With nearly €100 bn of transactions already in the first three quarters, 2013 should post solid gains in investment activity over 2012.'