Commercial property investments in Europe climbed 17.7% year over year in the third quarter, marking the best third quarter in the market in five years.
According to Cushman & Wakefield, quarterly commercial real estate investments grew 5.1 percent to €35.9 billion ($48.5 billion), while annual volumes increased 20.4 percent to €149.3 billion. Buy
"The market is already shifting gears swiftly," said Jan Willem Bastijn, Cushman & Wakefield's EMEA head of capital markets. "For starters, demand was shifting into second-tier core areas. Then there was demand for better quality secondary properties in top cities in previously ignored areas such as southern Europe, and today there is demand for better quality secondary assets in top cities."
France, the United Kingdom, and Germany continue to attract investors, accounting for 65 percent of total investment in the third quarter, up from 57 percent in the second. However, as confidence grows, interest is moving to other areas, according to the firm.
Investment volumes in Central Europe surged by 179 percent in the third quarter, compared to a market increase of 5%. Values are stabilizing as demand extends across the region, according to the business.
"Where demand will spread next is unclear, given how restless some capital is in search of the proper product," Mr. Bastijn said, "but what does seem certain is that the pricing correction that has already begun will only accelerate, and this will happen much sooner than many are forecasting."
Industrial property investment volumes surged by 189 percent in the third quarter, followed by 18 percent for offices. Retail investment, on the other hand, fell by 10% due to a lack of prospects and financing.
The firm also discovered increased interest from cross-border investors, who accounted for 43% of the market in the third quarter, up from 39% in the first half.
As Europe is already having a strong fourth quarter, the firm forecasts the yearly volume of commercial property investment to reach €145 billion for the year.
Internos is expanding its European portfolio.
Internos Global Investors Limited has acquired Commerz Real's real estate (CRS) Spezialfonds business, bringing its portfolio to €1.6 billion in assets.
CRS's nine funds, totaling 68 assets spread throughout nine Central and Western European nations, are included in the deal. The majority of the assets are logistics and office buildings in France and Germany.
Since 2009, Internos, located in London, has conducted nine comparable transactions. With the new transaction, the firm's total assets under management have increased to €3.9 billion ($5.3 billion).
In the last six months, the firm has been named investment manager of Local Shopping REIT plc, held the second close of its Hotel Real Estate Fund with €210 million in equity, and won two mandates: one to manage a French portfolio for a Swedish pension fund, and the other to invest up to €200 million in value-add European hotel real estate for the Saxony Doctors Pension Fund in Germany, according to the firm.
Internos chief executive Andrew Thornton stated in a statement that the new acquisition "moves towards Internos' long-term strategy choice to manage a diversified range of assets across varying classes, quality, and geographies with a weighting towards core and opportunistic European funds."