UK narrows gap with Germany for listed real estate

Germany remains Europe’s biggest listed real estate market, but its star is waning as Brexit clarity allows the UK to narrow the gap. The value of the UK’s listed commercial property market jumped by 22% in the fourth quarter after a surge in investor confidence following the General Election. At the end of December, the value of the UK market reached $108.8bn (£83.7bn), having risen by just 2% in Q3 to $89.5bn, according to the latest figures from the European Public Real Estate Association. This represents a 32% increase compared with the end of December 2018, when the UK market was valued at $82.7bn. The UK remains the second-largest developed European market behind Germany, but it is catching up. In Germany, values rose by 9% from $107.1bn in the third quarter of 2019 to $116.6bn in Q4. The German market grew by 11% year-on-year from $104.6bn at the end of December 2018. The value of Europe’s listed commercial property market rose by 13% in Q4 to $563.9bn, up from $499.2bn the previous quarter. Over the whole year, this represents a 25% increase from $451.9bn. Dilek Pekdemir, EPRA’s research manager, said: “The UK listed real estate market bounced back in a big way in the last quarter, as investors took confidence from perceived business certainty following the UK General Election result. Though, it begs the question: how long will this last? “The UK has had a volatile year, but the performance of real estate equities in the last quarter has been astonishing. The value of UK real estate equities has increased by almost a fifth in just three months, and the UK is now chasing Germany for the European listed real estate crown. It will be fascinating to see how this plays out.” She also highlighted Sweden, which was the fastest-growing listed real estate market in Europe in 2019. “In the past three months alone, the commercial real estate market in Sweden has grown by almost a fifth, beating even the returns of a UK market bouncing back from uncertainty.” The Swedish market reached $83.8bn in Q4, up by 24% quarter-on-quarter. EPRA’s report shows that the total value of commercial real estate in developed Europe is estimated at around $8.2tn, of which listed real estate makes up $499bn. In total, there are some 196 real estate investment trusts within the listed real estate sector in the developed European markets, with a combined market capitalisation of more than $241bn. To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette Photo: Newscast/Shutterstock