European Commercial Real Estate Investment Activity Increase

European commercial real estate investment hit €58 billion (£50.3 billion) in the first half of 2013 – a figure up by 12% compared to the same period in 2012, according to a report by Jones Lang LaSalle (JLL).

This increase reflects the sustained attraction of commercial real estate (CRE) in the largest European cities, and also a sustainable improvement across Southern Europe.

Activity in Southern Europe increased by 34%, when compared to the first half of 2012.

Non-domestic investment doubled over the first half of the year, with acquisitions by Qatari in Italy and Spain, Allianz and AXA in Italy, and the Generalitat Office Portfolio in Spain – the first foreign acquisition since the Spanish sovereign crisis.

“The largest markets of the UK, France and Germany remain attractive to global real estate investors, however, as we anticipated volumes are beginning to increase in Southern Europe, reflecting the rising appetite from investors over the last nine months,” said Richard Bloxam, head of European Capital Markets at JLL.

“Current investor sentiment would suggest that activity will accelerate as the big/ask spread begins to narrow.”

An increase in stock availability has been identified as a key contributing factor to the rise in activity, with Allianz extending their portfolio to include seven shopping centres in major cities in Austria, Slovenia, and Italy. This returning investor confidence and increased interest in cross-border portfolios is a promising trend for European CRE.

“At the half way stage, Europe is on track for €125 billion, mirroring full year volumes recorded in 2012. Although a lack of prime opportunities have constrained activity in some markets, this has been counterbalanced by growth elsehwhere,” said Robert Stassen, head of European Capital Market Research.

“We feel that investment sentiment is improving which together with better availability of debt, has given investors the confidence to increasingly invest outside the prime locations. This should translate to solid reported investment volumes in the second half of the year and could me that there is further upside to our full year forecast.”

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