This report is designed to provide our clients with an immediate view on prime rents and yields across major markets and sectors in the region as at the end of the quarter. In 2015, prime European hotel yields - split up by operating type - have been included in this publication for the first time.
• CBRE preliminary figures show CRE investment of nearly €56 billion of in Europe in Q2 2015, up 15% on Q2 2014. • Spain, Portugal, Finland and Norway all saw investment more than double compared to Q2 last year. • Of the largest European markets Germany led the way with investment of €12 billion, up by €5 billion (62%) on Q2 2014.
By: Michael Haddock, Senior Director EMEA Research The investor demand behind Europe’s recent nearly-twofold increase in CRE investment has come from all over the world. However, U.S.-based buyers’ acquisitions of European CRE has leapt from 2011’s €9 billion to €38 billion in 2014.
• Industrial occupier demand in the EMEA region continued to strengthen in the first quarter, with a substantial y-on-y take-up growth for warehousing space across Europe. • As a result, rental growth is visible in a small but growing number of markets • Feeding both occupier and investor demand, the development pipeline across Europe is growing, both in size and in scale. • Investment activity slowed down in the first quarter due to lack of product, but investor appetite is still strong and continues to put downward pressure on yields
Hotel investment growth outpaces other CRE asset classes in Q1 2015. Quantitative easing and a low interest rate environment are resulting in increased appetite to invest in consumer-driven real estate asset classes. European hotels 2015 Q1 Y-o-Y growth in investment volume reaches +114%. The three largest markets of the United Kingdom, Germany and France all see large Y-o-Y increases in Q1 transaction volume on the back of strong trading performance and anticipated future growth. Southern Europe sees a +301% Y-o-Y increase in Q1 transaction volumes as investors take a particular focus on acquiring hotel assets in Spain. CEE and Austria is benefitting from a spill-over of capital previously looking at assets in Western Europe, based on attractive yields and healthy trading performance data. Yield sharpening is particularly apparent for properties encumbered by an operational lease and those with vacant possession (unencumbered).