August 6, 2012
European investment volumes forecast to reach €100bn for the full 2012
(Virtual Press Office
• Total real estate investment activity rose in Q2 2012 to €25.4bn, a 4% increase on Q1 2012
• Close to three quarters of investment activity focussed on the three core markets of the UK, France and Germany
• Growth in equity rich overseas investment main driver of growth. Inter-regional investors posted a positive net investment of €5.2bn in Q2 2012
• As the economic outlook remains weak, investment volumes forecast to reach €100bn for the full year.
: DTZ, part of UGL Services, a division of UGL Limited (ASX: UGL), today released its latest European Investment Market Update. The report from DTZ Research, shows total direct commercial real estate investment totaled €25.4bn in the second quarter of 2012, a modest 4% increase on Q1 2012. This took first half volumes up to €50bn, a performance in line with the €52bn recorded in the same period of 2011. However, uncertainty surrounding the European sovereign debt crisis and weak economic growth is negatively impacting investor sentiment, which remains risk averse.
Magali Marton, Head of DTZ CEMEA Research, said: “Close to three quarters of investment transactions took place in Europe’s three largest markets – the UK, France and Germany, as volumes totaled €18.7bn. Typically these three markets account on average for 60% of total European activity. This shift is a clear sign that investors are very much focused on the perceived safety of these large and liquid markets. Both France (up 114% to €4.2bn) and the UK (up 25% to €10.4bn) posted growth in volumes. In Germany, volumes were down 17% to €4.1bn reflecting weaker activity in the office sector.
Elsewhere in Europe, Benelux and CEE markets posted strong declines, with only €832m (-60%) and €334m (-60%) invested in Q2. In contrast, Nordics countries appeared more resilient with investment totaling €3.9bn down by 10% on Q1 2012 and only marginally below the quarterly average of €3.7bn recorded in 2011.
Domestic investment totaled €13.6bn, an 11% decrease on Q1 2012. At 53%, its share of total investment was below average of 63% since 2008. Cross border investment rebounded over the quarters totaling €11.8bn in Q2 driven by both investors within Europe and those from outside.
Nigel Almond, Head of Strategy Research at DTZ, added: “Increasing flows of capital from outside of Europe are the main driver of activity. Much of this activity has seen more equity rich investors from the Americas, Middle East and International funds centered on core markets of Central London and Paris. On a net basis the increasing market share of inter-regional investors is more evident with a positive net investment of €5.2bn in Q2, up from €2.4bn in Q1 and continuing the trend seen in the past five quarters.”
Magali Marton continued: “Commercial real estate markets continue to suffer from the ongoing European sovereign debt crisis and limited lending capacity from the banks as they focus on deleveraging their balance sheets. Reflecting this sentiment we expect investment volumes for the full year to reach €100bn. Continued flows of capital from overseas investors targeted towards core markets will support investment activity. We see some upside potential for investors willing to move up the risk curve and focus on better quality secondary assets.”
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About DTZ and UGL Services
DTZ is now combined with UGL Services. UGL Services is a division of UGL Limited. The combined business of DTZ and UGL Services is now one of the largest property services companies in the world. It provides corporate/occupier clients with a global, integrated, end-to-end service offering and best-in-class investor services capabilities in investment agency, leasing agency, property and facilities management, project and building consultancy, valuation, and investment and asset management. The organisation has 27,000 permanent employees and 43,000 personnel including contractors, operating across 225 offices in 45 countries. For further information, visit: http://www.dtz.com
In November 2002, after 9 years of successful operations on the Romanian real estate market, Echinox Consulting entered a partnership agreement with the multinational company DTZ, one of the leading global real estate services companies. Therefore Echinox Consulting became the local DTZ representative office, operating under the trade name of DTZ Echinox.
DTZ Echinox provides a full range of services to investors, occupiers and owners across all sectors of the real estate market. http://www.dtz.com/ro
About UGL Limited
UGL Limited (ASX: UGL) is a global leader in engineering, property services and asset management and maintenance operating in the water, power, transport, resources and property sectors. It consists of four divisions – UGL Infrastructure, UGL Rail, UGL Resources and UGL Services. Headquartered in Sydney, Australia, UGL Limited operates worldwide across 45 countries employing approximately 56,000 people. For more information, visit: http://www.ugllimited.com