Investment into European commercial property is expected to reach €210 bn in 2015 - topping 2006 volumes, according to DTZ.

Investment into European commercial property is expected to reach €210 bn in 2015 - topping 2006 volumes, according to DTZ.

As Expo Real opened in Munich, DTZ Research published a report that estimates there will be €175 bn of European investment transactions in 2014, a 22% increase on 2013. This is based on strong activity in the first half and some pending portfolio sales for the remainder of the year.

For 2015, DTZ projects 20% growth on 2014 to €210 bn in total transaction volumes. This is in excess of 2006 volumes. This is based on DTZ’s recent Great Wall of Money report, which shows that new capital targeting Europe grew by 11% to $142 bn (€111 bn) in the last six months.

Growth in European transaction volumes during the first half of 2014 was recorded across most of the region, led by Benelux, France, Southern Europe and the UK. Domestic investors increased their activity over the period gaining share from overseas investors.

Nigel Almond, head of Capital Markets Research at DTZ, said: 'Investors seem to be more focused now to deploy their raised capital then before. This is partially based on expectations that interest rates could start increasing next year. However, based on our Transaction-Based Price Index, we are not yet seeing the increase in volumes pushing prices up across all of Europe, with the UK as an exception.'

DTZ's Great Wall of Money report - also released to coincide with Expo Real - highlights 11% growth in new capital targeting Europe to $142 bn (€111 bn). This has been triggered in part by the good relative value available in commercial property compared to other asset classes, as highlighted in our Fair Value Index results.

Magali Marton, EMEA head of Research at DTZ, concludes: 'Even if higher interest rates reduce the relative attractiveness of European property, we do expect there to be a delay in investors’ ability to react to this a relative re-pricing. The prevalent fund structure in Europe creates a fee dependency which is likely to push managers to invest rather than return capital, when relative value moves away in the short term.'