European property investment hits record €359bn

Frankfurt

Investment in European real estate reached an all-time high in 2021, according to the latest data from international real estate advisor CBRE.

The data shows that €359 billion was invested into commercial real estate in 2021, up 25% on 2020 and up 8% on 2019, the previous record year.

The fourth quarter of 2021 was also a record quarter for European real estate investment with volumes totaling €136 billion, up 37% on Q4 of 2020 and 10% on Q4 of 2019.

Germany and the Nordics both posted record investment volumes with increases in 2021 of 39% and 44% respectively.

Germany saw total investment volumes reach €110 billion, the highest amount ever recorded by a European country.

Most other major European markets saw higher full-year volumes compared to the previous year, including the UK (+49%), Ireland (+54%), Spain (+33%) and Italy (+13%).

However, 2021 volumes were down on 2020 in several markets including France (-9%), Portugal (-21%) and the Netherlands (-10%).

The record year was largely driven by several large platform deals including Vonovia’s €22.3 billion takeover of Deutsche Wohnen’s Residential platform in Germany and the €9.1 billion sale of Akelius’ Residential business in Germany and the Nordics to Heimstaden.

The office market remains the largest sector in Europe with investment volumes reaching €111 billion in 2021, up 16% on 2020.

The office market was particularly strong in the Nordics (up 117%), the UK (up 48%), the Netherlands (up 30%), Spain (up 27%) and Germany (up 10%).

The multifamily housing market continued to perform exceptionally well, posting a record year, and is now challenging the office market as the largest investment sector.

Total investment volumes in multifamily housing reached €102.6 billion in 2021, just €9 billion behind the office sector.

Last year was also a record year for industrial and logistics investment, with volumes up 48% reaching €62 billion.

Chris Brett, Head of EMEA Capital Markets, CBRE said: “We saw a strong rebound in investment volumes in 2021, surpassing the previous record set in 2019, and we are anticipating the positive momentum to continue.

“The recovery has been supported by the low interest rate environment and strong economic growth.

“This has bolstered investor confidence, but rising inflation and the continued emergence of Covid-19 variants remain challenges.

“Following record performances in the multifamily and industrial sectors, we are anticipating further strong appetite from investors for these asset classes in 2022 and the office recovery is now well underway.

“Investors are once again starting to see value in retail and we expect more capital to target the sector in 2022, particularly retail parks and grocery-anchored retail.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.