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24. Mai 2012 
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Office market dominates European property investement
An increasing supply of good quality office property coming to the market and strong demand from investors meant that the office sector accounted for half of the European commercial property investment in the first quarter of 2012 (Q1 2012), according to the latest research by global property advisor CBRE Group, Inc.
The office sector was dominant in Q1 2012, seeing €12 billion of investment and accounting for 50% of the total market. However, despite the level of transactions, the office sector saw a rise in the average prime yield of 6 bps to 5.69%. An estimated €45 to €50 billion in assets is expected to change hands in the European office sector this year, with equity rich investors such as sovereign wealth funds and foreign pension funds remaining among the most active purchaser groups.
Major transactions that have already taken place this year include the sale of Maximilianhöfe in Munich, a prime mixed-use property that was bought by Pembroke Real Estate for approximately €540 million and the purchase of 1 Cabot Square in Canary Wharf, London, by Qatar Investment Authority for circa €400 million.
The office market’s performance reverses the trend of much of the last three years during which retail property grew consistently as a proportion of the European market. Following high levels of retail investment during 2010 and early 2011, retail activity fell back to 19% of the market in Q1 2012, the lowest recorded share since the start of 2007. It is worth noting that the average prime retail yield continued to fall in Q1 2012 despite the fall in transactions, indicating that lack of product rather than lack of demand is driving activity.
Jonathan Hull, Head of EMEA Capital Markets, CBRE, commented: “We are finding that prime retail property remains in strong demand from investors; however, after the high levels of activity in recent years the supply of good new investment opportunities was very limited at the start of this year.
The office sector was dominant in Q1 2012, seeing €12 billion of investment and accounting for 50% of the total market. However, despite the level of transactions, the office sector saw a rise in the average prime yield of 6 bps to 5.69%. An estimated €45 to €50 billion in assets is expected to change hands in the European office sector this year, with equity rich investors such as sovereign wealth funds and foreign pension funds remaining among the most active purchaser groups.
Major transactions that have already taken place this year include the sale of Maximilianhöfe in Munich, a prime mixed-use property that was bought by Pembroke Real Estate for approximately €540 million and the purchase of 1 Cabot Square in Canary Wharf, London, by Qatar Investment Authority for circa €400 million.
The office market’s performance reverses the trend of much of the last three years during which retail property grew consistently as a proportion of the European market. Following high levels of retail investment during 2010 and early 2011, retail activity fell back to 19% of the market in Q1 2012, the lowest recorded share since the start of 2007. It is worth noting that the average prime retail yield continued to fall in Q1 2012 despite the fall in transactions, indicating that lack of product rather than lack of demand is driving activity.
Jonathan Hull, Head of EMEA Capital Markets, CBRE, commented: “We are finding that prime retail property remains in strong demand from investors; however, after the high levels of activity in recent years the supply of good new investment opportunities was very limited at the start of this year.
