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May 3, 2016

Investment into European real estate is down 15 per cent year-on-year with US$48 billion trading in the first quarter of 2016, according to new figures.

Quarterly volumes from JLL show that the region’s top three markets – France, Germany and UK – saw weaker investment activity between January and March 2016, with the UK registering the biggest decline of 34 per cent.  Germany saw volumes slip by  8 per cent to US$8.5 billion, while France recorded volumes of US$3.7 billion, a 24 per cent drop on the same period last year.

This is unsurprising, however, says David Green Morgan, global capital markets research director, JLL, ‘given the tepid economic recovery and political issues hanging over the continent’.

“Clearly the question of Brexit has been a major sentiment driver, though London, as a centre for global trade, has also imported a degree of uncertainty from the apparent slowdown in Chinese demand,” he added.

Across the region, volumes were down almost 50 per cent quarter-on-quarter, but this comes off the back of very strong investment flows for the final quarter of 2015 of over US$90 billion.

Bright spots

There were some bright spots, however, with volumes rising in the Nordics, Benelux and the CEE.

The Nordics registered a pick-up in volumes over the quarter, supported by particularly strong activity in Finland which was up almost 500 per cent against the same period last year with US$1.7 billion of deals trading.

Sweden, which saw US$2.7 billion of investment activity, recorded year-on-year growth of 47 per cent.  The Benelux countries witnessed a rise of 27 per cent, though this was largely down to a very strong quarter in the Netherlands where volumes rose by 117 per cent to US$1.5 billion.

Meanwhile, Southern Europe witnessed a 5 per cent decrease across the region compared to the same quarter last year, led by Spain, which saw a 28 per cent fall year-on-year fall.

Leasing volumes looking up

Where investment volumes dipped, occupier activity continued to thrive across most of Europe with office leasing volumes up 14 per cent year-on-year, making Q1 2016 the strongest first quarter since 2011.

Germany was again the star performer, led by Berlin, while Frankfurt experienced a strong start to the year.

Other noteworthy Q1 performances include Brussels (+53 per cent), Dublin (+43 per cent), Budapest (+37 per cent) and Stockholm (+34 per cent).

David Green Morgan
Global Capital Markets Research Director

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