European Real Estate investment hits €19,1B in Q1 2010
65% Increase on Q1 2009 Confirms Investment Market Recovery
European commercial real estate investment turnover reached €19.1 billion in the first quarter (Q1) of 2010, a 65% increase on the €11.6 billion transacted in Q1 2009, according to the latest data from CB Richard Ellis (CBRE). This extends the general recovery in investment activity that began in the latter part of 2009, with almost all European markets reporting turnover increases over Q1 2009. As expected, however, the Q1 2010 figures showed a decline compared to Q4 2009 volumes. As the last few months of the year are traditionally the most active, with investors pushing to complete transactions by the year-end, this quarterly decline is consistent with normal seasonal patterns.
Despite an overall quarterly decline, several markets experienced a quarter-on-quarter increase in activity, most notably Germany, Iberia and the Nordic region. This was driven by an upturn in investment in the retail sector, which accounted for more than half of the total transacted in each of these markets in Q1. Retail property has featured strongly in the European market generally in 2010. Accounting for 42% of the total investment volume in Q1 2010, retail surpassed office investment activity.
In contrast, France and the UK reported more moderate levels of activity in Q1 2010. In both cases, while investment was higher than in Q1 2009, it was lower than in Q4 2009 and below 2009’s quarterly average. France in particular saw investment levels held back by a lack of product and was one of the key markets where offices continued to dominate, comprising around 65% of the total turnover.
A notable feature of the European investment market in 2010 has been the growing number of large deals. Preliminary results suggest at least 12 €200 million-plus assets changed hands in the first quarter of the year. This compares to an average of only eight deals per quarter in 2009 in the €200 million-plus category. With quite a few larger deals already in pipeline and due to complete later in a year, an ongoing flow of larger deals should help to boost activity levels further.
Jonathan Hull, Executive Director of EMEA Capital Markets, CB Richard Ellis, said: “The growing number of large transactions in Europe reflects the broadening range of investors who are able to transact at the larger end of the scale. As was the case over the last couple of years, equity buyers continue to be the engine powering the market at the moment. Although still largely concentrated at the core end of the spectrum, they are increasingly prepared to invest in larger lot sizes. An increasing number of leveraged value-add and opportunistic players are starting to be more active now too. Helped by improved sentiment in the debt market, they are expected to become more prominent buyers through 2010.”
Michael Haddock, Director of EMEA Capital Markets Research, CB Richard Ellis, commented: “If Q1 activity levels are any indication, the European real estate market is set for a pronounced year-on-year recovery in investment activity in 2010. Whilst 2009 witnessed a notable upturn in investor sentiment in some of the major markets, 2010 is starting to see a broader recovery establish itself across Europe, albeit at the core end of the market. Property yields have continued to tighten, and prime office yields have come in the most, with nearly half of all city locations monitored in the EU-27 indices reporting a quarterly decline, in many cases in excess of 15 basis points.”
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our website at www.cbre.com.