Property investment dives across European cities
Cities across Europe saw the amount of money invested in property plummet during the first half of 2019, with London’s drop of a third eclipsed by falls elsewhere.
Between January and the end of June, investment in property in London declined by 33.3% from a year earlier, to €10.56bn (£9.81bn). In Madrid investment volumes crashed by 53% to €1.91bn, while in Munich volumes collapsed by 45.8% to €2.05bn, according to CBRE.
Of the 11 European cities studied, only Berlin and Paris posted an increase in investment, with Berlin experiencing a 17.8% rise to more than €6bn and Paris seeing 5.5% growth to €10.5bn.
Cities across Europe saw the amount of money invested in property plummet during the first half of 2019, with London’s drop of a third eclipsed by falls elsewhere.
Between January and the end of June, investment in property in London declined by 33.3% from a year earlier, to €10.56bn (£9.81bn). In Madrid investment volumes crashed by 53% to €1.91bn, while in Munich volumes collapsed by 45.8% to €2.05bn, according to CBRE.
Of the 11 European cities studied, only Berlin and Paris posted an increase in investment, with Berlin experiencing a 17.8% rise to more than €6bn and Paris seeing 5.5% growth to €10.5bn.
Jos Tromp, CBRE’s head of research for continental Europe, attributed the lacklustre volumes to a shortage of stock on the market rather than a potential Europe-wide recession looming.
“This late in the cycle, the fact is that availability of investible stock is limited, particularly in those cities, as most quality product was traded in recent years,” he said.
“Late cycle does not necessarily mean a strong drop in investment liquidity.”
He added: “With interest rates lower for longer, market liquidity is likely to remain high generally, but lower than in recent years due to [poor] product availability.”
Echoing the downward trend in investment volumes across the cities during the first half of 2019, investment volumes across all sectors in Europe, the Middle East and Africa were down except in hotels, which nudged up 1.9%.
The biggest fall was in retail, where investment volumes dropped by 41% to €15.9bn. Residential and industrial investment also fell, by 26.7% and 14.6% respectively.
Tromp explained that investors’ interest in traditional asset classes, such as offices, had not lessened, but owing to a lack of available product to buy, they are increasingly considering investment in alternative asset classes, “out of which hotels is clearly the most mature”.
He added: “Retail is the only sector that is currently not benefiting from strong investor interest. The importance of e-commerce is increasing, and therefore expected to have a continued effect on the retail market and its liquidity for the foreseeable future.”
Of the cities covered by the research, take-up increased only in Berlin (up 8.5% to 4.3m sq ft), Madrid (up 49.7% to 4m sq ft) and Milan (up 23.6% to 2.6m sq ft).
Office rental growth was highest in Berlin, owing to low vacancy rates and strong demand, followed by Madrid, where rental growth was driven by low vacancy for quality stock despite overall higher vacancy levels, Tromp said.
The biggest fall in take-up was in Amsterdam, where CBRE recorded a 41% decline to 1.34m sq ft, down from 2.27m sq ft in the first half of 2018.
In Paris, including Centre West, La Defense and Western Crescent, take-up fell by 27.9% to 5.9m sq ft.
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