Significant increases in real estate investment turnover in the UK, Germany and Spain in the third quarter of this year propelled an upturn in the European commercial real estate investment market, according to the latest data from CB Richard Ellis. European investment activity in the third quarter totalled EUR 17.3 bn, a 34% increase on the previous three months and the highest quarterly result so far this year. Despite the quarterly increase, in year-on-year terms the third quarter of 2009 total is virtually half the EUR 30 bn investment turnover recorded in the third quarter of 2008.
Significant increases in real estate investment turnover in the UK, Germany and Spain in the third quarter of this year propelled an upturn in the European commercial real estate investment market, according to the latest data from CB Richard Ellis. European investment activity in the third quarter totalled EUR 17.3 bn, a 34% increase on the previous three months and the highest quarterly result so far this year. Despite the quarterly increase, in year-on-year terms the third quarter of 2009 total is virtually half the EUR 30 bn investment turnover recorded in the third quarter of 2008.
The UK and Germany, in particular, saw some of the sharpest improvements, both reporting increases of more than 50% in investment activity compared with Q2 2009. While investor interest in Germany remained local and stayed firmly fixed on the prime segment of the market, the situation was rather different in the UK. Investors in the UK have started to see value across a wider product range and have become increasingly prepared to take additional risk by investing in more secondary product. Spain was another major western European market to see a prominent increase in activity in the third quarter, with EUR 1.5 bn worth of transactions - a 44% increase on the second quarter.
Another new development in the European market in Q3 2009 was the completion of two EUR 1 bn-plus deals - marking the first time since Q3 2008 that deals of this size have been transacted. One of these was British Land's EUR 1.2 bn sale of the Broadgate Estate office complex in the City of London to US opportunity fund Blackstone Real Estate. The other was Spanish bank BBVA's EUR 1.15 bn sale and leaseback of a portfolio of mainly bank branches located in Spain.
CBRE said these transactions are important to note given the sharp fall in average transaction size post Lehman’s collapse. The largest transaction in Europe during the first half of 2009 was the sale of the former Dawnay Day portfolio in the UK for around £600 mln (EUR 669 mln). There were only 36 transactions of over EUR 100 mln in Europe in the first half of 2009, a trend which is starting to reverse as deals for more than EUR 100 mln became much more common place in the third quarter.
