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- July 1, 2014: Vol. 8, Number 7

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Just a brief rest, then on again: The European property market paused for breath in the first quarter

by Simon Mallinson

Europe’s commercial real estate investment market ran out of steam in the first quarter, after 15 months of scintillating growth left investors struggling to deploy capital in the continent’s biggest economies. It should prove to be only a temporary pause.

A total of €35.2 billion of property transactions was recorded in the first quarter, 10 percent down on the same period the previous year. Investors complain that competition for a shrinking pool of assets, particularly in the “core” western European markets of France, Germany and the United Kingdom, has bid up prices for the most suitable investment-grade product. This has led many to reassess markets on Europe’s periphery, where the pricing of prime assets is still attractive, or to turn to secondary assets or locations in the core markets.

A pause was inevitable if we consider how investment flows in the preceding five quarters built up. Commercial real estate in Europe really rediscovered its mojo las

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