By Matthew Richards, Head of EMEA Capital Markets, JLL
EMEA transaction activity continues to increase, with Q3 volumes up 20 percent year-on-year to €59 billion, bringing total investment over the year-to-date to €164 billion – a 15 percent increase on the same period last year. The region is on track for full-year volumes to exceed 2016 levels by as much as 10 percent (€242 billion), hence coming close to 2007 levels (€245 billion).
This a strong result in view of some of the recent political unease, not least the uncertainty resulting from the Brexit referendum in the UK, EMEA’s largest market. Indeed, it appears that the UK has shrugged off these concerns pushing year-to-date levels up 27 percent on 2016. All eyes are now on Spain and the forthcoming elections in Catalonia. While it is too early to measure any concrete impact, it is encouraging to note that elsewhere activity has tended to return to trend relatively quickly following a shock.
Aside from the UK, strong drivers of investment activity year-to-date include Germany (EMEA’s second largest market) which saw volumes rise by 10 percent year-on-year and the Netherlands seeing a 109 percent increase compared to the same period in 2016. These gains have been balanced by falls in France (-15%) and Sweden (-14%) trailing slightly on last year’s pace.
Overall, the appetite for real estate shows no signs of abating. Against the backdrop of strong economic growth across the Eurozone and low interest rates, real estate remains attractive. Large transactions backed by global capital continue to dominate the headlines whilst appetite for operationally intense asset classes such as student housing, healthcare and PRS/multifamily remains strong. There has also been an increase in entity-levels deals, with Blackstone, for example, acquiring Finnish property firm Sponda for €3.8 billion, as well as announcing its intentions to sell its pan European logistics company, Logicor, to affiliates of China Investment Corporation (“CIC”) for €12.25 billion.
That said, there has been no shortage of large single asset transactions. Recent examples include the acquisition by Oxford Properties and Madison International Realty of the Sony Center in Berlin for €1.1 billion from South Korea’s national pension fund (NPS).