Commercial property investment spikes in Europe
The UK totalled €37.6 billion in commercial investment (Q1-Q3 2017) – a 2.80% rise. Finland crowned the place to invest, as commercial property volumes rise by 121.60%. 51.0% of European investors cite Logistics and Industrial as the sector to invest in, 2018. A “stronger demand” for European property in 2018, say 58.9% of European investors.
Research released by Knight Frank in the European Quarterly, Commercial Property Outlook (Q3 2017) proves a strong third quarter last year has put 2017 European investment volumes on course to beat 2016.
In fact, a total of €47.4 billion was invested in European commercial property in the third quarter (Q3) 2017; a 13% increase on the same quarter of 2016.
Inspired by the strong performance in Q3, which took European commercial investment volumes for the first three quarters of 2017 to €144.4 billion, up by 3% year-on-year, commercial property specialists, Savoystewart.co.uk sought to uncover the countries stirring the most interest in investment in Europe.
In analysing the figures, Savoystewart.co.uk found several countries experienced a spike in commercial investment in 2017. Most notably in Finland, with a total investment of €5.6 billion, Q1-Q3 – a rise of 121.60% on figures from 2016.
Hungary (89.90%), Romania (73.50%), the Czech Republic (43.30%) and Netherlands (41.70%) followed, with considerable increases measured.
Though missing out on the top ten for highest commercial investment volumes, the UK received a gargantuan €37.6 billion in commercial investment, Q1-Q3 2017, which accounts to a 2.80% rise on 2016.
Indeed, the recovery in UK volumes has been primarily driven by the sale of large assets in London to overseas buyers, particularly in Hong Kong. Including a single €1.4 billion deal – the largest noted in the third quarter of 2017. The UK’s position as a strong contender in commercial property therefore, should not be overlooked. Particularly as other European locations experienced catastrophic falls in commercial investment volumes, the top 3 identified as Ireland (-58.30%), Sweden (-38.60%) and Switzerland – with an average -35.50% fall in investment figures.
Darren Best, managing director of savoystewart.co.uk, comments:
“This rise and fall could reflect how investors are beginning to look toward locations outside of populist countries; places which may offer a renewed energy and stability to commercial business in uncertain times.
I believe the top ten countries will certainly be commercial locations to watch in 2018. But what is also crucial to note, is that investment in commercial property in Europe is thriving, overall – and the UK plays a large part in that.”
Furthermore, Savoystewart.co.uk discovered the top five preferred sectors for investors* in 2018 are Logistics and Industrial (51.0%), Specialist – including automotive/student/healthcare – (28.3%), Office at 15.2%, Hotel (3.4%) and Retail with 2.1%.
58.9% of the same investors believe there will be a “stronger demand” for commercial property in Europe in 2018, while 31.5% claim there will be no change and 9.6% agree the demand will be weaker.
*Knight Frank recently took a snapshot of investor sentiment, polling European-focused clients at its annual European Breakfast event.