European commercial property investment spikes ahead of Mipim

Research released by real estate consultancy Knight Frank in the European Quarterly, Commercial Property Outlook (Q3 2017) shows a strong third quarter put 2017 European commercial property investment volumes on course to beat 2016, which provides a good preamble to one the world’s largest real estate conferences, Mipim, which begins on March 13.

A total of €47.4bn was invested in European commercial property in the third quarter of 2017, a 13% increase on the same quarter of 2016. The first three quarters of 2017 gathered €144.4bn, an 3% increase year on year,

In analysing the figures from the first three quarters of 2017, Savoystewart.co.uk found several countries experienced a spike in commercial investment. Finland saw the greatest gains with a total investment of €5.6bn in the first three quarters of 2017 – a rise of 121.6% on figures from 2016.

Following Finland came Hungary (with a 89.9% rise), Romania (73.5%), the Czech Republic (43.3%) and the Netherlands (41.7%). The UK missed out on the top 10 for the highest rise in commercial investment volumes. However, it received an impressive €37.6bn in commercial investment in the first three quarters, accounting a 2.8% rise on 2016, and 25% of all investment in Europe during that period.  

The recovery in UK volumes was primarily driven by the sale of large assets in London to overseas buyers, particularly in Hong Kong. This included a single €1.4bn deal – the largest in Europe in the third quarter of 2017.

Conversely, other European locations experienced large losses in commercial investment volumes, with the top three identified as Ireland (-58.3%), Sweden (-38.6%) and Switzerland (-35.5%).

Savoystewart.co.uk reports that the top five preferred sectors for investors in 2018 will be logistics and industrial (51%), specialist (including automotive, student, healthcare) (28.3%), office (15.2%), hotels (3.4%) and retail (2.1%).

There will be a stronger demand for commercial property in Europe in 2018, according to 58.9% of investors interviewed by Knight Frank, while 31.5% claim there will be no change and 9.6% believe that demand will be weaker.