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LONDON-As GlobeSt.com has reported in the past few weeks, Prudential has made major push into the UK, followed shortly by Wells Fargo. These stateside companies are realizing the commercial real estate business they can gain in the face of the banking meltdown, which sources are reporting is expected to increase as we move deeper into 2013.
Coming off a relatively flat year in terms of European acquisitions in general, the expectation is that buyers, in the words of Real Capital Analytics‘ European Capital Trends report, will continue to “feast on assets that are increasingly being unloaded by European banks.”
So what were the Top Five markets for investment, regardless of where you were from? Topping the list again (as it has since 2007) is London, which saw nearly 24 billion euros ($32.6 billion US) in volume last year. Paris came in second (again, a slot it’s held since 2007) with 12.4 billion euros ($16.9 billion) in volume. Berlin is up a slot from 2011, to #3 with its 5.4 billion euros. Stockholm and Frankfurt, at 4 and 5 respectively, drew 4.2 billion ($5.7 billion) and 3.8 billion euros ($5.2 billion) worth of activity.
The US kicked some global investor butt last year. Some 60% of all global investments into Europe came from North America, but Canada’s portion of that dropped a whopping 41% since 2011, while the US increased its stake there by 14%. Latin America and Japan also showed an increasing appetite.
For the most part, the local buyers have been sidelined, as the report states: “The decline in domestic acquisitions was evident across all capital groups and almost every major region. Local investors throughout Europe have been particularly challenged by tight credit conditions. As a result, the wide gap in pricing between small and large markets is likely to continue into 2013 given a weak domestic capital base strengthening cross-border capital focused primarily on the largest markets.”
By far, the single largest buyer of properties in Europe was sovereign wealth fund NBIM. “But other SWFs also greatly accelerated investment, collectively doubling direct property acquisitions in Europe,” says RCA. “The investment was almost equally derived from funds based in Asia as from those in the Middle East.” In keeping with the general trend., most SWF investments were found in London and Paris.
Office was the darling of investors, accounting for 42% of all deal volume, even though that skipped some 7% from the year before.