Mideast investors 'driving EU property market'
Dubai, September 10, 2013
The Middle East and North American investors are the major drivers of increased activity in the European commercial real estate market, according to the latest data by a global real estate consulting firm.
CBRE found that buyers from outside the region now accounted for more than a quarter of all transactions in the first half of the year.
Investors from the Middle East increased investment activity, accounting for nine per cent of the entire market and 21 per cent of cross-border transactions.
Capital from the Middle East is generally institutional in nature, with nearly half of the total coming from the region's sovereign wealth funds.
Transactions from Middle East buyers show a strong bias towards London (nearly 50 per cent of the total) and offices, although there were several large retail properties among the purchases made.
"London remains the destination of choice for foreign investors due to its solid growth potential and its status as a global financial hub, alongside its stable political environment and a transparent legal system, which are key for international and regional buyers alike," commented CBRE Middle East managing director Nick Maclean.
Buyers from North America accounted for a steadily increasing share of the market - 13 per cent of the entire market and 24 per cent of cross-border transactions in the first half.
This could have a significant effect on the dynamics of the property market as US investors, which make up the vast majority of activity, typically look at a more diverse range of markets.
The total value of commercial real estate investment activity in Europe continued to grow in the second quarter at 6 per cent higher than the total for the first quarter this year.
The 32.6 billion euros recorded over the quarter shows a 22 per cent increase on the same quarter last year and is the highest second quarter total since 2007.
The level of cross-border investment in Europe continues to increase, both in absolute terms and as a proportion of the market as a whole.
Over the first half, foreign buyers accounted for 44 per cent of all transactions (by value) compared to 40 per cent in the second half of last year.
A significant change has developed in the sources of cross-border real estate investment, with intra-European investment - where the buyer is from another European country - accounting for just 16 per cent of transactions in the first half.
This percentage had been holding steady at around 20 per cent of the market throughout 2011 and last year.
Investment capital from outside Europe is becoming increasingly important to the market and now accounts for 28 per cent of all transactions in the first half from 19 per cent in the second half of last year.
Even within this group of non-European investors there has been a marked change in the sources of capital.
Within Europe, German investors remain the largest group of cross-border buyers; the open-ended funds continuing to be active buyers around Europe with acquisitions totaling well over 1 billion euros.
The German 'Spezial' funds are also active, but their acquisitions have been strongly focused on Germany in the first half of this year, stated the CBRE report.
The long-term trends in buyer mix that have been evolving since the financial crisis have continued into 2013.
Most notable of these is the growth in direct institutional investment in real estate, which has increased steadily over the last six years from 9 per cent in 2007 to 26 per cent of the total.-TradeArabia News Service
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