Commercial Real Estate Investment In Spain And Ireland Close To Record Levels
Ireland and Spain are close to record-breaking levels for commercial real estate (CRE) investment as buyers search for value in non-core markets, according to the latest research from global real estate advisor CBRE.
European CRE investment totalled €48.4 billion in Q3 2014 - a substantial 27% increase on Q3 2013 and 4% higher than the previous quarter. For the year-to-date, total investment has reached €133 billion compared to €105 billion for the first three quarters of 2013, an uplift of 27%.
The performance of Irish and Spanish CRE investment markets was particularly impressive in Q3 2014. Ireland achieved its highest total ever this quarter with €1.6 billion, surpassing the previous high in Q3 2006 of €1.5 billion and in Spain, the €3.5 billion invested in Q3 2014 was the country’s second highest quarter on record.
CRE investment activity in other “recovery” markets was also strong in Q3 2014, with the Netherlands (35%), Italy (40%) and Portugal (54%) all recording significant year-on-year increases.
The core markets of UK and Germany continue to show strong growth, with both countries recording increases of over 20% compared to both the previous quarter and Q3 2013. In both countries investors are increasingly active outside of the major centres – London and the “Big-5” German cities – to the benefit of regional markets.
Commenting, Jonathan Hull, Managing Director of CBRE Capital Markets EMEA, said:
“Competition continues to be strong in core markets and, investors are increasingly willing to move up the risk curve, in terms of both destination and type of asset, in order to achieve value. Ireland and Spain in particular have benefitted by investors’ decisions to look beyond just the “core” markets and are set for record-breaking years in terms of investment activity.
“UK and Germany, where CRE investment has historically centred on London and the top five German cities, have seen a shift away from the core cities. In the UK the level of investment outside of London is now increasing much faster than in the capital. Similarly in Germany, investors have expanded their CRE investment criteria to include mid-size cities and class B locations in the Big-5.”
Johnny Horgan, Head of CBRE Capital Markets in Ireland, added:
“Following the pattern of deleveraging that has occurred in Ireland over the last few years and which has gained pace over recent quarters, particularly since NAMA began to offload several portfolios of assets, there has been a notable increase in transactional activity in the Irish market. The volume of spend in the first nine months of 2014 at almost €3 billion is above even the volume of activity seen at the peak of the Irish market in 2006/2007.
“A combination of availability of product, strength of the underlying occupier markets, Dublin’s higher rental growth projections and the superior economic growth projections for Ireland relative to the Eurozone generally are encouraging a range of new investors to look for opportunities in the Irish market.”