London is “number one” city for European real estate investment

Many institutional investors say London commercial real estate is the best place in Europe to invest, a survey indicates.

Following the UK’s decision to leave the European Union, nearly two in five (38%) of the 96 institutional real estate investors surveyed cited London as the top European city to invest in commercial property.

However, the survey also highlighted a trend towards German commercial property, with Berlin just behind London at 36% of the vote, and Munich in third place with 31% (see table).

Also supporting Germany as a prime target for property investment was the finding in the BrickVest report that one in five respondents cited both Dublin and Hamburg and a further 16% selected Frankfurt.

Overall, 40% of the top ten European cities were German.

BrickVest, a real estate platform, said its research showed that 30% of institutional investors thought Brexit would either increase or significantly increase European commercial real estate investment opportunities. Almost a quarter thought Brexit would have no impact on commercial real estate investment opportunities.

Emmanuel Lumineau, chief executive at BrickVest, said: “Our research has identified London as the number one European city to invest in commercial real estate as investors seek to capitalise on potential price discounts and market uncertainty. However Germany dominates across the leaderboard and we have seen plenty of appetite from investors looking to capitalise on income producing portfolios across Europe and take advantage of the Brexit vote.”

Jason Winfield, head of investment agency, UK & Ireland at Cushman & Wakefield, noted there had not been a collapse in commercial property prices following the Brexit vote, as had been feared. After the vote, many funds suspended dealing.

“Initial concern of a collapse in prices has not materialised. The weighted average fall from offer price to complete price is just 2.8% with little variation between London and the rest of the UK.”

In research from Cushman & Wakefield that shows “consistent but slower” progress in deal activity since the Brexit vote, the firm said that 80% of overseas investment had been in London, with the rest in the regions.

The BrickVest research also highlighted the concerns about illiquidity of commercial real estate, which have magnified since the suspension of dealing in a number of UK property funds after the Brexit vote.

Just over 60% of respondents did not believe there was enough access to a secondary property investment market.

BrickVest said is aims to provide access to a secondary market over the coming months.

The top 16 cities for investors

London 38%
Berlin 36%
Munich 31%
Paris 22%
Dublin 21%
Hamburg 21%
Frankfurt 16%
Barcelona 11%
Zurich 11%
Amsterdam 10%
Brussels 10%
Copenhagen 10%
Warsaw 5%
Milan 4%
Madrid 3%
Stockholm

1%

©2016 funds europe

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