Cross-border investment transactions in EuropeÂ's commercial property were $9.9 billion (â‚¬ 10.2 billion) in the first half of 2002, 4% above the first half of last year despite a fall of 26% in take-up by office occupiers and much weaker leasing markets.
These are among the findings of a new report 'Cross-border Real Estate Investment - More Capital Targeting Europe' by Jones Lang LaSalle, which monitors deals across Europe for its unique investment transactions database. The report covers the first half of 2002 and the whole of 2001.
The $9.9 billion (â‚¬ 10.2 billion) of cross-border transactions comprises $7.3 billion (â‚¬ 7.5 billion) of acquisitions by foreign buyers and $2.6 billion (â‚¬ 2.7 billion) of sales by foreign owners to domestic investors. The appetite of investors to build commercial property holdings in markets abroad is greater than the figures suggest, as a shortage of available property has limited the volume of acquisitions and created intense competition among both domestic and foreign buyers for quality real estate assets.
The UK attracted 27% of foreign purchases during the first half of the year, followed by France with 21%. These markets are well-established favorites for foreign buyers. Sweden leapt to third place with 15%, combining counter-cyclical opportunities with asset availability. Italy and Spain also gained market share.
The report also analyses the sources of cross-border capital. German open-ended public funds continue to be a dominant force - representing 25% capital invested - as the German public, disenchanted by equity markets, continues to boost the liquidity of these funds. Third party managed investment funds that invest across Europe have proliferated and are important players. Private investors have been particularly active this year, accounting for a fifth of all foreign purchases.
Looking forward, the report concludes that a combination of low interest rates, the attractions of property as an asset class, high levels of liquidity and a desire for geographic diversification all point to continued high levels of cross-border investment. At the same time, some performance-driven US-led opportunity funds will see currency gains from the stronger euro and the prospect of falling rents as prompts to sell.
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(source: Jones Lang LaSalle)