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UK continues to drive growth in European investment

• €66bn invested in European real estate in Q3 2017
• Investment volumes for the past 12 months up 14% on same period in the previous year

London - Moscow, 9 November 2017, - – Total real estate investment in Europe reached €66bn in Q3 2017, representing a 12% increase on the same period last year, according to the latest report from global real estate advisor, CBRE. This brings 2017 year-to-date European real estate investment volumes to €196.5bn. Investment volumes for the last 12 months reached €288bn, a 14% increase compared to the same period in the previous year.

The increase in Europe is supported by continued growth in the UK, driven by several high-profile office transactions, including the sale of 20 Fenchurch Street (commonly known as the Walkie Talkie) for £1.28bn. UK investment volumes reached €18.4bn in Q3 2017, up 49% on the same period last year, which was impacted by the referendum. Transaction volumes in Germany also remained robust, although growth eased in comparison to previous quarters. However, investment volumes for the last 12 months were up 19% on the previous 12 months. Italy, Spain and the Netherlands also all posted strong growth in comparison to the previous 12 months. In France, investment turnover was below Q3 in 2016, but market sentiment is increasingly positive.

Robust growth in the industrial and logistics sector once again characterized the market in Q3 2017, with investment volumes up 14% on Q3 2016 and 73% on the preceding 12 months. Alternatives and hotels also performed strongly but it was offices that represented the largest proportion of the market, with €32.6bn worth of office transactions in Q3 2017, up 50% on Q3 2016. Office transactions for the last 12 months reached €120.2bn, representing a 12% increase on the same period in the previous year.

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

“Investment volumes in Europe remain at elevated levels driven by strong growth in the UK. The UK market continues to recover from the impact of the referendum and the devaluation of sterling continues to attract significant European and global capital. UK growth is supported by high levels of overseas investment, particularly in London, which has resulted in several exceptionally large office and logistics transactions. The core markets of Germany, France and the Netherlands have maintained momentum in Q3 and we expect a strong final quarter. Economic recovery in the Southern European markets is reflected in the local property markets, which continue to attract capital. Transaction volumes in the last 12 months in both Spain and Italy out-performed the preceding 12-month period.”

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

“Russian investment volume has reached €2.2bn ($2.5bn) in Q1-Q3 2017, with a number of transactions expected to close in Q4 we anticipate YoY results to demonstrate marginal growth. Overseas investments recorded a 4.8 times increase in comparison to the previous year or a total of €485mln ($562mn) in Q1-Q3 comprising Western and Asian capital 70% and 30% respectively. Improved economy trends, such as 175 bps compression of the key rate (currently at 8.25%) since the beginning of the year, translate to an increasingly positive sentiment in the market. Whilst some investors are still waiting for continued market stabilization, others have faith in market recovery, hence a tangible increase in institutional arm’s length transactions in 2017.”