Nery Alaev writes about real estate investment in Europe.
In Europe, Commercial real estate investment has maintained strength in the second quarter of 2016. The investment amount totalled €54 billion – 2.5% higher than the previous quarter.
Wider-ranging overall activity fell however, with the office sector performing specifically well especially in the Nordic region.
I’ve decided to look into this news and find out more about the continent’s performance in 2016, in the shadow of the recent referendum in the United Kingdom.
A resilient environment
Provided by CBRE, the data also points out that uncertainty in the UK caused by the recent decision by the electorate to leave the EU hasn’t affected the continent drastically. Sentiment remained strong in European markets and investment levels were stable year-on-year.
France and Sweden proved to be particularly resilient to the uncertainty, with the office sectors in the two countries performing particularly well. Overall, investment grew in the two countries which saw growth of 32% and 20% respectively.
Like Sweden and France, Ireland performed well during Q2, transacting €2.3 billion of commercial property deals in Q2 2016. This is more than double that of the same quarter last year. Ireland has recently seen incredible (but somewhat questionable) economic growth – the investment in Irish commercial property is clearly a part of this surge, which has been built on foreign investment.
Perhaps unsurprisingly, the United Kingdom suffered a slump in performance. Interestingly, the weak pound now means that foreign investors may have see short-term gains from UK real estate.
Jonathan Hull, managing director of Investment Properties EMEA at CBRE, said:
“Whilst investors have reacted cautiously to Brexit, the market fundamentals remain strong and investors still have significant capital to deploy. The uncertainty means that many investors will watch and see how the market develops before deciding how to act,
‘However, sentiment is already improving as the UK enters a more stable political environment and there are signs that the market is responding positively to this.”
In summary, it appears that there may have been something of an overstatement in June’s somewhat apocalyptic narratives on post-Brexit Europe – the fundamentals remain solid.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.