According to CBRE Group's latest report, the office sector accounted for half of all European commercial property investment in the first quarter of 2012, owing to a growing surplus of high-quality office space on the market and strong investor demand (Q1 2012). villa qatar
In Q1 2012, the office sector dominated, attracting €12 billion (USD $15 billion) in investment and accounting for half of the overall industry. Despite the volume of transactions, the average prime yield in the office sector increased by 6 basis points to 5.69 percent. In the European office market, an approximate €45 to €50 billion (USD $57 to $63 billion) in assets is expected to change hands this year, with equity-rich buyers including sovereign wealth funds and international pension funds remaining among the most involved purchaser categories.
The selling of Maximilianhöfe in Munich, a prime mixed-use property purchased by Pembroke Real Estate for approximately €540 million, and the acquisition of 1 Cabot Square in Canary Wharf, London, by Qatar Investment Authority for approximately €400 million are two major transactions that have already occurred this year.
The success of the office sector reversing a three-year trend in which retail property rose steadily as a percentage of the European market. Following a period of strong retail investment in 2010 and early 2011, retail activity dropped to 19 percent of the market in Q1 2012, the lowest level since the beginning of 2007. Despite the drop in transactions, the average prime retail yield continued to decline in Q1 2012, suggesting that a shortage of product rather than a lack of demand is driving activity.
"We are finding that prime retail property remains in strong demand from investors," Jonathan Hull, CBRE's head of EMEA capital markets, tells World Property Channel. "However, after the high levels of activity in recent years, the availability of good new investment opportunities was very small at the start of this year."
The office business, on the other hand, tells a different story: In 2012, there was an increase in the number of high-quality office properties on the market. This has sparked strong interest from investors, who see the recent lack of construction activity as a possible driver of rental growth in the future - or, at the very least, a factor that will keep vacancy rates and rental income for quality assets stable."
In Q1 2012, the European commercial property investment sector totaled €23.8 billion, down 18% from the same timeframe the previous year. Given the downgrades in economic growth estimates since the middle of last year, the slowdown was not entirely surprising. The pipeline of large transactions in hand but not yet completed, however, indicates that the figures will improve slightly in Q2 2012.
The United Kingdom, Germany, and the Nordics are the most dominant regional markets for office investment, as well as for commercial real estate investment in general, all of which have benefited from investors' risk aversion in the wake of the eurozone crisis. During the first three months of 2012, the Nordics produced over €5 billion in revenue, the highest quarterly turnover since Q4 2010. In response to the region's economic independence from the euro and relatively strong domestic economies, local and foreign investor interest continues to rise.
"Recent political developments, especially the French Presidential election and the Greek parliamentary elections, will increase the uncertainty surrounding European economic policy in the short term," Hull added. This could have an effect on investment activity. The demand for prime real estate in central locations is unabated."