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European Real Estate Investment Volumes Total €69.2 billion in Q3 2018

-    In the Russian market in Q1-Q3 2018 the most tangible investment volume growth occurred in the residential segment - 

London - Moscow

  Investment into European real estate in the third quarter of 2018 reached €69.2 billion, the second strongest Q3 on record, and bringing the total for the first three quarters of 2018 to €216 billion, according to the latest data from global real estate advisor CBRE.

Looking at the 12-month trend, investment volumes are broadly flat compared to the same period in the previous year and the market continues to perform at near-record levels. 

Real estate investment in Germany and France remained strong. Germany continued to experience robust growth and recorded an increase of 12% compared to 2017, and saw investment volumes reach €19.5 billion. This has been primarily driven by a strong residential market, up 38% year-on-year, and office sales in the top five German cities. Similarly, France has remained resilient posting €4.7 billion for Q3 2018 and taking year-to-date investment volumes up 18% to €19.2 billion.

In the UK, investment transaction volumes reached €18.5 billion, a slight decline on the same period last year. Central London office transactions continued to drive investment volumes across the UK as the office market remains attractive to global investors.

The continued strength of the industrial sector reflected another notable quarter, and reached above €7 billion for the fourth consecutive quarter, taking year to date investment volumes to €22.5 billion. Alternatives, including healthcare, leisure and parking, also remained resilient, with investment volumes increasing by 8% in the first three quarters of 2018 compared to the same period in the previous year.

Against a backdrop of uncertainty for the retail sector, European retail investment volumes reached €10.8 billion in Q3 and contributed to an increase of 5% in the first three quarters of 2018 compared to the same period in 2017.

Jonathan Hull, Managing Director of Investment Properties, EMEA at CBRE, commented:

“Continental Europe has posted robust investment numbers for Q3 showing the strength of demand across all major markets. Whilst European institutional demand remains strong, international capital continues to target the European market. We have seen particularly strong demand from Korean institutions across the region. Looking forward to the end of the year we anticipate that investor demand and capital allocations to commercial real estate will remain strong reflecting investor confidence in the asset class.”

Irina Ushakova, Senior Director, Head of Capital Markets, CBRE in Russia, said:

"In the Russian market in Q1-Q3 2018 the most tangible investment volume growth occurred in the residential segment. In January-September of this year developers invested about $660 mln in residential development sites, which is 26% higher than in the same period of 2017. At the same time, the share of this segment in the structure of investments increased by 11 p.p. - from 20% in the first 9 months of 2017 to 31% in the same period of this year. This change is caused by the desire of developers to acquire and negotiate the project before introducing amendments into the law.

In Q1-Q3 2018, the volume of investments in the office segment decreased 1.6 times compared to the value for Q1-Q3 2017, and amounted to $440 mln or 21%.

The share of investments in retail real estate remained at the same level and accounted for 21% in January-September 2018, the same as in Q1-Q3 2017. However, the volume of investments in this segment decreased by 16% to $460 mln.

In Q1-Q3 2018 the share of investments in multi-functional complexes accounted for 13%, in industrial real estate - 10% and in hotels - 4% of total investment volume.

We expect that investment volume in real estate in Russia will reach $4 bln in 2018, whereas the recovery of demand in the commercial real estate markets and moderate economic growth will contribute to a possible investment volume increase in 2019."