EMEA attracted more real estate investment from overseas capital than any other global market in 2015, according to analysis published by Savills.
EMEA attracted more real estate investment from overseas capital than any other global market in 2015, according to analysis published by Savills.
In total, EMEA real estate markets received $183 bn (€167 bn) of capital during 2015, 63% of which originated from overseas.
With cross-border capital now responsible for eight of every 18 real estate transactions in the region, EMEA has proved to be significantly more attractive to international investors than other regions, which have typically seen funding for just one in every 10 deals coming from a cross-border source.
North America was the biggest source of investment in EMEA in 2015, spending $75 bn in the region over the year, compared to domestic and Asian investors who invested $68 bn and $24 bn respectively.
'For core buyers, there are a number of capital cities and gateway cities across EMEA such as London, Paris and the five big German cities, all of which offer an abundance of Grade A real estate with secure income steams,' commented Rasheed Hassan, head of cross-border investment at Savills. 'For more opportunistic buyers, in particular American funds, there are still distressed / value-add opportunities throughout EMEA in locations such as Spain, Greece and Italy. In addition, mainland Europe is behind the US and UK in its recovery following the GFC, which is providing NPL (non-performing loan) and large portfolio deals.'
The market is also now seeing additional deal flow from a number of investment houses in North America that traditionally concentrated on the value-add market, but have now raised new funds with a lower cost of capital and, as a result, are also looking at core assets throughout EMEA.
Savills highlights that North American investors in general tend to be more highly leveraged, with average loan to values of 64%, compared to Asian buyers at 53% and those from EMEA at 59%.
Rasheed continued: 'As the amount of Asian investment started to increase dramatically in EMEA, particularly from pension funds, state funds and insurance companies, there was a concern that this would create less liquidity in some of the European markets as they typically have much longer investment horizons and lower leveraged transactions than US / domestic investors or buy in cash. However, we have seen increasing examples of these investors trading.'