H1 2007: CBRE European Investment
As in 2006, the three most significant markets (by value) remained the UK, Germany and France, jointly accounting for two thirds of the European total in H1 2007.
Strong demand for European real estate has certainly continued in H1 2007, with cross-border investment playing a leading role in the market development. A record 57% of the total value transacted in the first six months of the year was cross-border activity.
American, British and German investors were the most active cross-border buyers in H1 2007, with an aggregated €39.6 billion worth of purchases this year so far. Sharp growth in purchasing activity outside of their local markets was especially notable by the British and German investors.
Increased activity by the British came as a result of increasing sterling interest rates, whilst high liquidity in the German Openended
Fund sector prompted a sudden search for investment opportunities across Europe.
Cross-Border Activity
The €119 billion transacted in the European commercial property market in H1 2007 was a 17% increase on the same period last year.
Interestingly, a prominent difference in European investment this year so far has been the shift in sector distribution. Office investment activity increased to 58% of the European market total from just half of the market total in 2006. A number of large trophy-buying deals across wide location spectrum, as well as trading of a few large portfolios, prompted such increase. The share of the retail sector, on the other hand, fell to only 19% of the total, with most marked declines registered in France and Germany. However, a number of deals are reported to be in the pipeline. It remains to be seen if retail share will regain its usual 25-28% of the market by the year end.