Investment activity slows down in H1

The figure is 5 pct lower than a year ago, but still remains 42 pct up on the average H1 figure for the last ten years. While H1 2018 investment volumes are slightly down compared to last year in both the UK (-9 pct) and Germany (-7 pct), they are up by 27 pct in France (compared to a sluggish first half of 2017) due to the presidential elections. The Netherlands and Poland particularly stand out, recording an annual increase of investment activity of 176 pct and 100 pct respectively, followed by Ireland (94 pct) and Portugal (35 pct).

Europe is still attracting foreign capital, which accounted for half of the total volume, in line with the 5-year average. However, overall cross-border inflows mainly came from European countries during the first half of this year, whereas both US and Asian investments in European property decreased compared to last year. US capital is beginning to switch from opportunistic strategies to focus more on core/ core plus opportunities. The decrease of Asian inflows is mainly due to the Chinese government’s restriction on foreign investment, but interest from Korean and Singapore investors in particular is continuing.

“We are seeing markets in Europe slow down but at the same time the fundamentals remain in place, despite political risks. Therefore we believe the current cycle could continue for quite some time. Interest from international and domestic investors in European real estate remains high and we expect the commercial investment volumes for 2018 to be broadly in line with last year,” said Marcus Lemli, the head of Savills European investment. Offices will continue to be the preferred European asset class over the next twelve months, although investors’ appetite for alternative assets and logistics will continue to rise, claims the real estate consultancy.