Institutional investors drive Q2 European volumes - RCA

Strong buying activity by institutional players in their home markets propelled European real estate investment volumes to €50.6 bn in the second quarter of 2014, latest figures from research firm Real Capital Analytics (RCA) show.

The Q2 figure marked a 21% increase from the year-earlier period and was the strongest three-month period since the financial crisis after the fourth quarter of 2013 when €66.1 bn of transactions were registered.

The Q2 figure brings investment volumes for the first half to €89.3 bn, up 10% from a year earlier.

Simon Mallinson, RCA’s managing director for EMEA, commented: ‘This is a potent sign of the recovery in Europe’s property markets from the financial crisis. Domestic institutions are more confident about the prospects for commercial real estate in this low interest rate environment and amid signs that economic recovery is taking root in Europe.’

Institutional investors are now targeting secondary markets, he said, where they expect to find better value than in prime city markets.

The most pronounced shift was in the UK, where London registered a 1% drop in Q2 transaction volumes to €6.77 bn. By contrast, investment flows in the UK as a whole rose 31% in the same period to €15.0 bn, led by cities such as Manchester and Newcastle-upon-Tyne.

The largest single property transaction in Europe in H1 was Lone Star’s €1.3 bn purchase of Coeur Défense in Paris’ La Défense business district. The largest portfolio deal saw French REIT Klépierre sell some €1.5 bn of 126 retail galleries to a group of institutional investors led by Carrefour. Pimco was the most active international investor in Europe during the first half with €2.6 bn of purchases. In terms of investment markets, Amsterdam stood out as the Dutch capital returned to the top 10 investment destinations in Europe – in sixth place - with €1.5 bn of transactions.

Click on the attachment below for the full RCA press release