European mega deals boost 2017 real estate transaction volumes

European real estate transaction volumes rose in 2017 as large investors carried out a number of portfolio deals and corporate mergers, according to Real Capital Analytics (RCA).

Deals with a minimum value of €500m accounted for 24% of deal volume, boosting turnover to €293.4bn – a 4% rise on 2016.

Last year ranked behind 2015 and 2007 as the most active for commercial property deals on record.

Tom Leahy, RCA’s EMEA Analytics senior director, said: “Last year was all about the big deal. The weight of capital targeting real estate has increased competition for good properties, pushing large investors deploy their money in portfolios or corporate M&A.

“It reflects the mid-to-late stages of the real estate cycle, which is being sustained by historically low interest rates, accelerating economic growth and subdued inflation.”

China Investment Corporation’s €12.2bn acquisition of Blackstone’s European logistics arm Logicor, was Europe’s largest portfolio transaction in 2017.

Notable real estate corporate M&A deals include Gecina’s takeover of French listed peer Eurosic, and Blackstone’s acquisition of listed Finnish property firm Sponda.

RCA’s data, however, does not include Unibail-Rodamco’s acquisition of Westfield Corporation and the tie-up between London-listed Hammerson and Intu Properties, both of which were announced in December last year.

RCA’s report also highlighted that in 2017, there were four individual properties sold for prices that exceeded €1bn.

The largest was Coeur Défense in Paris’s western business district to Amundi, Primonial REIM and Predica CA Assurances for around €1.8bn.

The others were the purchase of London’s Leadenhall Building and 20 Fenchurch Street by Hong Kong-based investors and the €1.1bn acquisition of the Sony Center in Berlin by Oxford Properties and Madison International.

According to research published by JLL, global transaction volumes globally recorded a 6% uplift to $698bn in 2017 from 2016’s $661bn.

Data provider Preqin, however, said capital raising for real estate funds slowed last year.

While the $109bn (€87.5bn) raised for private real estate funds last year is down on 2016’s $126bn, it is still relatively high and means 2017 was the fifth consecutive year for real estate funds to raise more than $100bn.

Preqin also says the figure could be revised up by up to 10% once more information comes through.

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