Total real estate investment in Europe reached €74 bn in the second quarter of 2017, representing a 25% increase on the same period last year, according to the latest report from CBRE.
This brings total investment in real estate in H1 2017 to €130 bn, a 13% increase on H1 2016.
The strong quarterly performance was, in large part, driven by an upturn in UK trading activity with volumes reaching €23.4 bn in Q2 2017, up from €16 bn in the first quarter, and a 54% increase on the same period last year.
Jonathan Hull, managing director of investment properties, EMEA at CBRE, commented: 'After a relatively slow start to the year, the UK has seen a significant recovery in investment volumes in Q2 2017. Despite ongoing political uncertainties, the UK remains a pre-eminent market, attracting significant European and global capital.
‘In addition, the continental European markets continued to perform strongly in the second quarter of 2017 with Germany once again proving a major focus for capital and demonstrating its status as a safe haven for global wealth.'
Growing confidence in the recovery markets of Spain and Italy has come to the fore this quarter as investors seek to allocate capital to these markets, Hull added.
Germany a key driver in continental Europe
In its report, CBRE confirmed that Germany once again proved to be the driving force behind investment growth in H1 in continental Europe which, as a region, posted 15% growth on the same period last year. In Germany, transaction levels for H1 2017 increased by 49% compared to H1 2016, transacting €13.9 bn in Q2 2017 and €26.5 bn for the first half of 2017.
The data supports the message that emerged from PropertyEU’s H2 Outlook briefings, which were held in key European cities in the last few weeks. Speakers at the special investment briefing forecast a spate of new investment records across the region.
Reports from the events are published in the July edition of PropertyEU Magazine.
The Southern European markets of Italy and Spain, as well as the Netherlands, also witnessed strong investment growth over the first half, CBRE said, posting 110%, 76% and 38% increases on the same period last year respectively.
In France, the results for the first half of 2017 were somewhat muted. However, CBRE said that the election of Emmanuel Macron as president in May would likely have a positive impact on occupier and investor sentiment, and the investment pipeline had strengthened going into H2 2017.
Overall European volumes have been driven by 'robust growth' in the industrial and logistics sector and, to a lesser degree, the alternative sector, as investors look to diversify their asset base, CBRE said.
Logicor bolsters industrial sector
The industrial sector witnessed a 303% increase on the same period last year, which can in part be attributed to the sale of the Logicor portfolio. The alternatives sector posted a 20% increase. Meanwhile, office transactions across Europe in Q2 2017 were down 6% on Q2 2016.
The €12.2 bn sale of Logicor, Blackstone's European logistics business, had 'substantial UK exposure', CBRE said. But even if this large transaction were to be excluded, investment volumes would still be trending up year-on-year, as market activity continued to recover from the slowdown immediately preceding and following last year’s EU referendum.
