Office investment dominates in Q1 2012

Offices claimed the lion's share of real estate investment in Europe during the first quarter of 2012, while retail - for some time the most popular target - dropped to third place behind residential property.

The office sector accounted for EUR 7.6 bn, or 43% of the total volume of EUR 17.2 bn tracked in the first three months of the year, according to preliminary data compiled by PropertyEU Research. Some EUR 3.9 bn was invested in residential property in the first three months of the year, with only EUR 2 bn to EUR 2.5 bn flowing into the retail property segment.

The largest reported office deal during the first quarter involved Norwegian financial giant DnB Nor. The group's insurance arm, DnB Liv, teamed up with DnB Scandinavian Property Fund to acquire DnB's new headquarters in Oslo in a deal worth EUR 624 mln in mid-January. Other notable office transaction saw JP Morgan Asset Management agreeing to buy 54,500 m² of office space in Paris from French property company Eurosic for over EUR 500 mln. JP Morgan reportedly acted on behalf of Hong Kong Monetary Authority.

Also in Paris, Invesco Real Estate acquired the Cité du Retiro and Néo office properties in Paris on behalf of a Middle Eastern client. The vendor was German fund manager KanAm.

KanAm - which is in the process of liquidating its open-ended Grundinvest fund - sold two London office properties over the three-month period, 90 High Holborn and One Exchange Square, to Malaysian investor Permodalan Nasional Berhad. The investment volume was not disclosed but the assets were part of a four-asset portfolio of London offices valued at more than EUR 1 bn. During the quarter PNB also acquired 1 Silk Street in London from Beacon Capital for over EUR 400 mln.

PNB and its country peer EPF have been described as the 'new Germans', a reference to how they have replaced German open-ended funds (GOEFs) as the largest foreign buyers of real estate in London. Both Malaysian funds have invested more than EUR 1 bn in the UK capital in the last few years. But at the start of April this year, PNB pulled the plug at the last minute on the EUR 320 mln acquisition of the Woolgate Exchange office property in the City of London.