Global investment volumes down, though Europe shows some resilience

European property investment declined by 18% in the first three quarters of the year, showing greater resilience than other regions, largely thanks to a record Q1, data from broker Knight Frank shows.

Globally, investment volumes were down 33% on average and as much as 41% in the US.

Retail saw its share of the investment market drop further to around 15% of total transactions (down from 27% in 2015) while industrial and residential both increased their shares with industrial increasing from 9% in 2015, to 14% in 2020 and residential increasing from 16% in ’15 to 23% today.

In terms of the origin of the capital, European cross border capital accounted for over 75% of transactions over the past eight months, an increase form 60% previously.

Despite the difficult period, the market saw only minor price adjustments while a number of transactions pointed to an increase in pricing across a few of the major European markets including the top 5 German cities and Paris which has remained firmly on the core funds radars.

This includes core, long-leased assets such as Schönefeld Airpark in Berlin which sold to CBRE Global Investors and client Zurich Insurance Group for a record low yield of circa 3.5%, or €136 mln. This compares to a pre-Covid pricing of €118 mln, or a 4% yield.

Similarly, Weisses Quartier in Munich sold post-Covid to Deka Immobilien for a 2.9% yield, or €280 mln, while it was marketed for €255 mln, or a 3.25% yield.

‘What is clear is the core end of the market has held up exceptionally well,’ Knight Frank said.


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