Spain is top target for commercial real estate investors in Europe, new poll shows
Active commercial real estate investors see Spain as the top investment target in Europe for next year as values are still below peak, new research suggests.
This is a sign of the Spanish commercial market’s recovery, with Germany following close and Germany is next on the list, according to a poll of investors carried out by international real estate firm Knight Frank.
‘The fundamental rationale behind investing in Spain is even stronger than this time last year. Prime CBD office rents have risen by 20% over the past 12 months, but remain nearly 40% below the 2008 peak, and both footfall and sales have been increasing in dominant shopping centres for six consecutive quarters,’ said Humphrey White, head of Capital Markets at Knight Frank Spain.
At the same time some 25.4% chose Germany as their preferred target and Knight Frank says that the results mirror the buoyant investment activity seen in the country, with a total of €30 billion invested in property during the first half of 2015, an increase of 35% compared to the first half of 2014.
According to Joachim von Radecke, head of German Desk at Knight Frank in London, the increase is driven by the rising flow of foreign capital into the country and the 50% increase of domestic investor activity.
‘Foreign investors’ share of the German market continues to grow, and now accounted for almost 60% of all transactions in the first half of 2015. We saw the usual trend towards the big five markets of Berlin, Frankfurt, Munich, Hamburg and Düsseldorf, with 78% of total office transactions recorded in these cities,’ he added.
The UK also featured strongly in this year’s poll, attracting 17.4% of the votes, on the back of the continuing recovery which has now extended to the UK regions.
‘The UK is well ahead of the rest of Europe in terms of the property cycle and has already seen significant yield compression,’ said Chris Bell, managing director of Europe at Knight Frank.
‘However, it is encouraging that rental growth is beginning to re-emerge more widely across Europe, helped by the strengthening of occupier demand and the steadily falling availability of good quality space exacerbated by the lack of development over the preceding recessionary years,’ he added.