European CRE Direct Investment Grows

Jones Lang LaSalle reports that direct investment in commercial real estate (CRE) is growing in Europe. Increasing transaction volume and a robust U.S. stock market is contributing to …

Jones Lang LaSalle reports that direct investment in commercial real estate (CRE) is growing in Europe. Increasing transaction volume and a robust U.S. stock market is contributing to the acquisition of larger parcels and portfolios and experts expect the trend to continue throughout the year as domestic and international buyers scramble to score deals in tight markets. Moscow, London and Paris are now all listed in the Top 10 among global cities in terms CRE transaction volume, with the three cities capturing more than 25% of total global CRE investment.  For more on this continue reading the following article from Property Wire.

The first quarter of 2013 saw high levels of direct real estate investment across Europe, building on the momentum at the end of 2012, as both international and domestic investors targeted commercial real estate assets, according to analysts.

Transaction volumes in the large markets of the UK, France and Germany grew as they retained the bulk of investor attention, a new report from Jones Lang LaSalle shows.

This resulted in London, Paris and Moscow all ranking in the top 10 global cities by volume, accounting for $11.5 billion of the $40 billion total investment. Over 50% of transactions in these three cities was cross border, as overseas investors sought to gain exposure in the largest European markets.

‘Buyers are scrambling for opportunities in the largest European commercial real estate markets and this strong competition for the best product means we have seen a widening of search criteria, including location, asset class and risk level,’ said Richard Bloxam, head of European Capital Markets at Jones Lang LaSalle.

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He pointed out that the £142 million acquisition of One Angel Square in Manchester by RREEF Real Estate demonstrates investors will now consider regional opportunities that previously they might not have considered.

‘This trend will increase throughout the rest of the year as supply in the largest city markets remains restricted and as debt finance restraints continue to ease,’ he explained.

Activity was boosted by an increase in the number of large assets traded, which has driven the average real estate transaction lot size up to €47 million from €40 million a year ago. Transaction volumes for deals greater than €100 million also grew 59% year on year to €16 billion, above the five year quarterly average of €11 billion due to an increase in the number of portfolio transactions.

Matt Richards, head of International Capital Group Europe at Jones Lang LaSalle, said that despite on going discussions over its fiscal position, a buoyant US stock market is driving strong purchasing activity in Europe.

He pointed out that some $3 billion came into Europe from North America in the first quarter of 2013, a similar level to the amount invested in Europe from the Middle East. ‘No amount of disappointing economic data seems to halt the steady flow of money targeting attractive yields on offer from European real estate,’ he said.

The first three months of the year are traditionally the quietest for commercial real estate transactions yet the $105 billion of transactions recorded globally in the first quarter is the highest for five years.

With this flying start and no predicted let up from investors, Jones Lang LaSalle predicts that 2013 total global volumes may reach $500 billion.

This article was republished with permission from Property Wire.


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