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Europe beats expectations now H1 investment totalled

Despite previous expectations of a fall in European investment of around 40% by the end of the year, research firm Capital Economics is now taking a more optimistic view of the market’s prospects.
The firm said that although investment in Q2 was “sharply lower”, solid Q1 activity and the faster-than-expected economic recovery means total pan-European investment in 2020 will be only around 15% lower than its 2019 level – the forecast excludes the UK, however.

Pan-European investment volumes (€bn) excluding UK.
Source: CBRE, Capital Economics

The firm said that the disruption from the virus outbreak had a clear impact on investment activity in Q2and pan-European investment (again excluding the UK) totalled less than €40bn, about 30% below Q2 last year.
But the strong first quarter meant that investment in H1 “surprised on the upside” and was more than 5% higher than the same period last year. It was also in line with H1 activity in 2017 and 2018.

Expectations of 15% dip

Capital Economics now expects pan-European investment to be only around 15% below its 2019 total, compared to estimates from early in the year of closer to a 40% y-on-y drop. This assumes H2 activity is lower than recent years, because of uncertainty and subdued economic activity.
However, there will be differences in performance across counties and the recovery suggests investment in both Germany and the Czech Republic is likely to outperform its five-year average. Portugal could also do well given the resilience of investor interest the firm said while Spain stands out for its poor performance in H1