DTZ: European real estate investment volumes maintain steady growth in Q2 2011 (EU)

Investment in commercial real estate across Europe in the second quarter of 2011 reached €25.4 billion, representing a 14% increase from €22.4 billion in Q1, according to DTZ Research in its latest 'Investment Market Update' report.


The Nordics continue to post significant increases in market activity.

Investment volumes averaged €27.1 billion over the past four quarters compared with €20.7 billion in the same period a year ago. This is the seventh consecutive quarter of growth in this measure and underscores the steady growth in activity.

Magali Marton, Head of DTZ CEMEA Research, said: "Within the major European markets, the UK, France and Germany posted positive growth of 14%, led by an increase of 33% quarter on quarter in France to €2.7 billion. However activity in all three markets remains below the five-year average.

"In contrast to a peak in activity in Q1, investment within CEE markets has slowed with €0.4 billion invested in Q2 compared to €1.3 billion in Q1. The Nordics continue to post significant increases in market activity, with a 79% rise q-o-q to €4.6 billion".

The report reveals that the share of activity from overseas investors (29%) fell to its lowest level since 2002 reaching €7.5 billion in Q2 2011. Both inter and intra regional investors were less active during this quarter with investors outside of Europe least active.

In contrast, domestic investment increased 28% in Q2 to €17.9 billion. Activity by global investors nearly doubled this quarter to €1.4 billion from €0.8 billion in Q1. This is in line with recent DTZ research revealing a substantial amount of capital flowing from investors with global mandates.

The office sector accounted for the largest proportion of Q2 activity with €9.8 billion invested, representing 39% of total volumes. Activity also remained buoyant in the retail sector with volumes totaling €9 billion, driven in particular by shopping centers. The industrial sector saw a significant decrease in investments over the quarter, falling 45% to €1.7 billion and equating to a market share of just 7%. Activity in 'other' sectors increased from €0.6 billion in Q1 to €2.7 billion in Q2, this jump was partly attributable to sales of healthcare premises and several road side assets.

Magali Marton, Head of DTZ CEMEA Research, adds: "Our latest report shows that within the European markets many investors remain cautious predominantly due to the sovereign debt crisis continuing to impact on investor sentiment. We are confident that the momentum we have seen so far will continue into the rest of the year with volumes forecast to reach €123 billion for the year as a whole."

Tony McGough, Global Head of DTZ Forecasting & Strategy Research, comments: "We continue to see positive signals from the European property market, but investors need to be selective in seeking opportunities outside of traditional core locations.

"Our Q1 2011 DTZ Fair Value Index report highlights a reduction in the number of European markets that are HOT or WARM as a result of quick correction in pricing of many prime markets. Investors should therefore also consider CEE markets and opportunities offered

Related News