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Foreign buyers drive 46% growth in the European property investment market

The CB Richard Ellis European Investment Report, launched today at MIPIM, reveals a 46% year-on-year increase in the turnover of the commercial real estate investment market in 2006, to €227 billion.

    There was a similar increase the previous year, meaning that the total size of the market has more than doubled since 2004.The biggest increase was in Germany, where market turnover grew from just €20 billion in 2005 to over €51 billion in 2006, an increase of more than 150%.

    Several other Western European countries also saw turnover more than double, including Belgium, Finland, Denmark and Luxembourg. Central and Eastern Europe also saw a rapid increase in investment market turnover, with the total for the region increasing from €5.8 billion in 2005 to €12.7 billion in 2006.

    Most notable was the growth in the Russian market, but there was also a substantial increase in the level of transactions in the EU candidate countries, Bulgaria and Romania, in advance of their official accession at the beginning of 2007.

    The other key trend was the growth in the level of cross border investment. This increased by 70% to over €100 billion and around 48% of all transactions now involve a foreign buyer.

    The increase in investment by non-Europeans was particularly evident, with buyers from the USA especially active. However, the growing presence of Canadian and Australian investors also showed through.

    “The recent trends in the European real estate markets are a result of two major trends in global capital markets,” said Nick Axford, Head of EMEA Research at CB Richard Ellis. “The aging population of many developed nations has increased the level of savings looking for a home, while at the same time investors are recognizing that real estate has characteristics that are well suited to the needs of such savings.”

    Michael Haddock, Director of EMEA Investment Research, added: “What we are seeing is a leveling up of market liquidity. Other European countries are moving towards the levels of activity (relative to their size) seen in Sweden and the UK.”