German and French investors fill cross-border gaps: Savills

Eri Mitsostergiou.

The absence of some competitive investors from outside of Europe has allowed European investors to fill the space. German and French investors are allocating more capital to real estate than last year in a number of European countries according Savills, which has analysed data obtained by Real Capital Analytics.

“European real estate continues to be seen as a safe investment in times of Covid-19, in particular core offices, prime logistics and multifamily assets due to stable and long-term returns,” Savills director of European research Eri Mitsostergiou said.

German investors spent more than €1.4bn on Spanish commercial property between January and September 2020, an increase of 77% on last year’s €800m total volume. During the same period, German investors spent €1.89bn in the UK compared to €1.9bn during the whole of 2019. The spend in Italy was €850m, 79% of last year’s total of €1bn. Savills said the final quarter could push both beyond last year’s totals.

€57bn invested in Germany in Qs 1-3 2020

The figures can be compared with domestic investment in Germany. Between January and September 2020, €56.9bn was invested in German real estate. Commercial real estate accounted for around €41.1bn, which was 9% below the previous year’s figure. Residential properties transacted for €15.8bn, up 29% year-on-year, according to Savills.

Meanwhile, in the first three quarters of 2020 French investors allocated €2.45bn to German real estate (€2.54bn FY 2019), €326m to Irish property (€338m FY 2019), €1.1bn to the UK (€1.2bn FY 2019) and €1.5bn to Italy (€1.69 bn FY 2019).

“In challenging times, it’s normal to go to markets you’re familiar with, which is why we’re seeing so much German and French capital looking at domestic and neighbouring markets again,” said Savills Germany CEO and head of investment Europe Marcus Lemli. “Furthermore, the notable rise in European investor activity led by these two groups is a result of the money pouring into pension funds that needs to be reallocated in order to generate returns, with real estate benefitting,” he added.