The volume of European commercial real estate investment transactions plunged to its lowest three-month level since 2014 in the second quarter of this year, as the Covid-19 pandemic and associated lockdowns took a grip on markets, according to new data from RCA.
However, the completion of a handful of large deals in the period, notably in Germany, helped underpin activity, the European Capital Trends Q2 2020 report shows.
Tom Leahy, senior director EMEA Analytics at RCA said: 'In some respects the pandemic could be the perfect storm for real estate. Physical restrictions prevent property viewings and the potential economic fallout provides enough uncertainty to limit deal-making when property prices are at record levels in many markets.
'However, volumes across Europe have held up much better than some other markets in North America and Asia Pacific.'
The total European invement volume was €50.1 bn in Q2, a 32% fall on the same quarter of 2019, but a few 'supersized' corporate transactions, that were collectively at their highest level since 2017, mitigated the sobering picture painted by the deal count.
The tally of deals dropped 48% year-on-year in the second quarter to the lowest point since 2013. Transactions valued at €250 mln and over made up 40% of the quarterly total, on par with Q2 2019. For properties under €20 mln changing hands, the total transacted dropped by 55%.
German transaction volumes were propped up by ADO Properties €5.0 bn acquisition of Adler Real Estate and Aroundtown’s €4.7 bn purchase of TLG Immmobilien.
The two apartment portfolios together made up two- thirds of the sales volume in Germany this year. These deals are reflective of the resilience of the German market provided by the size, scale and sophistication of the domestic investor base.
In the UK, the Blackstone-iQ student housing deal added €5.3 bn to the second quarter total and excluding this entity transaction from the analysis would show the Q2 deal volume down 66% over the same period of 2019 instead of the 15% dip that the market registered.
Denmark stood out as the only other country in Europe, alongside Germany, to experience a rise in real estate investment transaction volume in Q2. At the mid-year point the total was double the level of the first six months of 2019, with the €280 mln sale of the Danske Bank headquarters in Copenhagen the largest single asset transaction in the national market since 2017.
