European property investment hits €359bn record high: CBRE

Chris Brett.

Europe’s real estate investment markets attracted €359 billion in 2021 according to data from CBRE, an all-time high, the firm said. Almost a third of the total was attributable to Germany.

The total was 25% more than that of 2020 and was 8% higher than that of 2019, which was the previous record year. The firm said that Q4, 2021 was also a record quarter for European real estate investment. Investment volume totalled €136 billion, which was 37% up on Q4 2020 and 10% ahead of Q4 2019.

Germany’s total investment volume reached €110 billion, a 39% increase and the largest amount ever recorded by a European country. However, most other major European markets saw higher full-year volumes compared to 2020, including the UK (49%), Ireland (54%), Spain (33%) and Italy (13%) and the Nordic region was collectively 44% ahead.

However, volumes were down compared to 2020 in several countries including France (-9%), Portugal (-21%) and the Netherlands (-10%).

Large platform M&A deals drove 2021 performance

CBRE said the record volumes were largely driven by several large platform deals including Vonovia’s €22.3 billion take-over of Deutsche Wohnen’s Residential platform in Germany and the €9.1 billion sale of Akelius’ Residential business in Germany and the Nordics to Heimstaden.

M&A and portfolio activity was one of the main conduits through which investors allocated larger volumes of capital to real estate, particularly in the multifamily sector and CBRE expects the trend to continue this year.

The firm also said that the office market remains the largest sector in Europe, with investment volumes reaching €111 billion in 2021, which was 16% more than in 2020. The office market was particularly strong in the Nordics (+117%), the UK (+48%), the Netherlands (+30%), Spain (+ 27%) and Germany (+10%). 

Recovery in 2022 likely to be geographically broader

CBRE expects a broader geographical recovery of investment into the European Office sector in 2022.

Multifamily housing is now challenging the Office market as the largest investment sector. Total investment volumes reached €102.6 billion in 2021, just €9 billion less than the office sector and 42% ahead of the 2020 total.

Industrial and logistics investment saw volumes up 48% to €62 billion underpinned by strong occupier demand. Notable deals included GIC’s €3.1 billion recapitalisation of EQT Exeter’s Europe Value Venture Fund III, Blackstone’s £1.7 billion acquisition of Asda’s distribution network and the €1 billion sale of Montepino and CBRE Investment Management’s Spanish logistics portfolio to Bankinter.

CBRE said that hotel investment volumes also pointed towards recovery, reaching €17.1billion, which was up 70% on 2020. Although retail investment is still under pressure, with volumes falling 11% to €35.2 billion in 2021, some markets showed volume increases, including the UK (51%), the Nordics (23%) and CEE (41%).

“Investors are once again starting to see value in Retail and we expect more capital to target the sector in 2022, particularly Retail Parks and Grocery-anchored Retail,” said CBRE’s EMEA capital markets managing director Chris Brett.

Brett is optimistic overall: “We saw a strong rebound in investment volumes in 2021, surpassing the previous record set in 2019.” He expects the positive momentum to be maintained.

“The recovery has been supported by the low interest rate environment and strong economic growth. This has bolstered investor confidence, but rising inflation and the continued emergence of Covid-19 variants remain challenges.”