Fallback in Asian investment as Americans return to the market
The European commercial property investment market reached €265bn in 2018, a result in line with 2017 all-time high. 2017 was the second best result for cross-border investment after 2007. In 2018, foreign investment reached €124bn, which represents a decline (-9%). This result was balanced by the rise in domestic investment (+7%). Cross-border investment represented 47% of total investment in 2018.
Despite a slight decrease (-4%) compared to 2017, European cross-border investors are the most represented (41%) in 2018. They were present in a number of retail assets such as the Kaufhof/Karstadt portfolio in Germany bought by SIGNA Prime Selection or the Champs-Elysées Apple store in Paris acquired by Hines on behalf of German BVK.
After a peak of investment over the €40bn bar in 2015, American investment in European real estate plummeted in 2016. Since then, Americans have come back slowly but surely, and by 2018, they progressed again (+7%) with €28bn invested. They were major players in Germany and France. Among the largest deals are Capital 8, an office building in Paris CBD purchased by Invesco for €846m and the Zalando campus in Berlin acquired by Hines for €240m.
Asia & Pacific investors went back to third place with €21bn invested in 2018, which represents a 19% decline. The level of investment from this part of the World remains very high, 19% over the 5-year average. They mainly targeted United Kingdom, Germany and France, with the Battersea Power station redevelopment scheme acquired by Malaysian Permodalan Nasional Berhad for €1.8bn or the office building Trianon in Frankfurt purchased by South Korean Hana Financial Investment.
Middle Eastern investors spent almost €6bn (-27%) in European commercial real estate, which represents a share of 5%.