European commercial real estate investment has reported its most active start to the year since 2007 with a Q1 2015 transaction volume of €64.3bn (£48bn), a 54% year-on-year rise, according to Real Capital Analytics.
The research showed that improving economic prospects drew more global investors to the European market between January and March.
Cross-border investment accounted for €35.7bn of transactions in the quarter, the first time in eight years that international capital accounted for more than 50% share of the investment volume.
Capital from outside continental Europe accounted for 30% of purchases with 116 investors, such as Israel’s Ariston Group, making their first acquisitions in Europe.
Italy registered almost a five-fold leap in transactions over Q1 to €3.75bn, lifted in part by QIA’s €1.2bn buyout of its joint venture partners in the 28-building Porta Nuova development in central Milan, which became Europe’s sixth-most active investment market as a result.
The first three months of 2015 were the strongest first quarter for Italian commercial real estate investment since 2007. Meanwhile, Portugal recorded almost a 14-fold surge from a low base to €623m, RCA’s data shows.
The periphery of the eurozone has posted the biggest increase in investor demand during the past 18 months. Transaction volumes in Spain more than doubled in the first quarter of 2015 to €2.8bn, 72% of which centred on Madrid.
Ireland, one of the first periphery eurozone real estate markets to register a recovery in investment, reported a 16% increase in transactions by value to just over €1bn.
Tom Leahy, RCA’s director of EMEA analytics, said: “Europe’s markets go from strength to strength as investors, particularly from outside the region, perceive it as offering attractive returns relative to other asset classes.
“Property in the eurozone currently yields 600 basis points more than 10-year government bonds. Eurozone periphery countries continue to attract attention, with notable pick-ups in Italy and Portugal.”
