Tag Archives: european
European commercial property sales set to continue with growth in 2015
European commercial property transaction volumes for 2014 are likely to exceed the €160 billion mark, up 10% on 2013, new research shows. A significant amount of capital continues to target commercial real estate and forecasts from real estate firm Knight Frank suggest a similar rate of growth in 2015, with total volumes expected to be in the range of €175 to €180 billion. All the main commercial sectors are attracting strong interest, while specialist sectors such as hotels, healthcare and student accommodation are becoming increasingly part of the mainstream property market, the firm’s report shows. ‘The really good news for both occupiers and investors is that rents in most markets remain lower than their pre-recession peaks, in some cases significantly below,’ said Darren Yates, head of Global Capital Markets Research. ‘This should provide a further boost to activity in 2015, with more occupiers looking to take advantage of good deals, while investors will seek to cash in on better rental growth prospects as the economic outlook continues to improve,’ he added. According to Andrew Sim, head of European Capital Markets, the forecast 10% rise of commercial investment volumes is a positive start for the first quarter of 2015. ‘We have witnessed a strong recovery in cities such as Madrid and Dublin and we are expecting demand to generally broaden out to smaller cities,’ he said. ‘Investors are looking to move increasingly up the risk curve to target good quality secondary stock, in addition to development opportunities,’ he added. While there are some lingering doubts about the strength and uneven nature of Europe’s economic recovery, both the European Union and the Euro area are poised for positive growth in 2014 and 2015, the report points out. Occupier markets are likely to continue to move in line with wider economic trends, with the Nordic countries and the Baltics currently seeing a significant improvement in occupier sentiment, while the UK is finally seeing a pick up in its regional city markets. However, the firm says that perhaps the most encouraging trend is the rebound in some of the peripheral markets, notably Ireland and parts of Southern Europe, with Dublin and Madrid in particular recording solid rental increases in 2014 and further growth expected in 2015. Despite the recent dip in economic performance, major French and German cities are also expected to perform well on the back of limited availability, with development yet to accelerate significantly in either country. The Russia-Ukraine crisis meanwhile continues to weigh heavily on those countries and, while property markets in the wider Central and Eastern European region have remained relatively untouched by the conflict, plentiful supply has constrained rental growth in key cities such as Prague and Warsaw. Continue reading
Investment in London commercial property market close to last peak in 2007
Investment in central London’s commercial property market reached £20.5 billion in 2014, marginally below the last investment peak in 2007 when £20.6 billion was traded, a new report shows. The huge weight of money flowing into the London real estate investment market from the UK and abroad looks set to continue in 2015 with the level of demand far outstripping the available supply, according to the data from global real estate adviser Cushman & Wakefield. A breakdown of the findings show that investment volumes in the City of London and Docklands reached just over £5 billion in the fourth quarter of 2014, the highest quarterly volume ever recorded in the market. The report says that the strong end to the year meant that the annual total reached £13.8 billion, which is the second highest on record behind the 2007 peak of £13.9 billion. Indeed, half of all investment volumes in the final quarter were as a result of three transactions in excess of £250 million each, which reflects the annual trend and 48% of all 2014 investment volumes were due to 10 transactions above this threshold. The report points out that increasing numbers of investors and surging volumes of equity are being invested into the City of London market with interest from a wide cross-section of investors, notably the world’s largest sovereign wealth funds. It also shows that overseas investors remain the most active in terms of transactional investment volumes accounting for 78% of both the fourth quarter and annual total. Asian investors dominated fourth quarter investment volumes but over the year North American investors have spent the most money in London. However, 2014 witnessed positive net investment from both Asia and the Middle East, while all other regions including the UK disinvested from the capital. Due to exceptional demand, the market yields are being driven down for all investments with prime at 4.25 to 4.5%, albeit several transactions have completed below 4%, notably the Gherkin. ‘We saw a strong City of London investment market in 2014 with international investors dominating acquisitions. The international appeal of London continues with an ever increasing spread of new global investors entering the market and there are no signs of an imminent slowdown,’ said James Crawford, Cushman & Wakefield’s head of City of London investment. ‘Deals from £1 million to £1.2 billion closed during 2014 and capital values hit an all-time high of over £1,400 per square foot at the Gherkin. The first half of 2015 shows all the early signs of a continuation of last year but we expect some profit taking to occur later in the year and uncertainty around the general election in May,’ he explained. ‘We estimate there is £250 billion of liquidity in the market available for direct investment in property and when this is combined with an improving debt market, a severe supply demand mismatch will be created,’ he added. The report also shows that the momentum recorded in… Continue reading
