RCA Insights

Europe Capital Trends 2016 in Review: Germany Takes CRE Crown

By on February 3rd, 2017

European real estate investment fell 21% in 2016 from the record levels of 2015, the new edition of Europe Capital Trends shows. Investment volumes in the U.K. dropped 43% and Germany took the crown as the largest transactions market in Europe.

A rockier investment landscape hampered activity last year. Political shocks emerged along with worries over global trade, oil prices, the Chinese economy and the specter of negative interest rates.

Investment in the first nine months of the year was significantly slower than in 2015. With the political outlook clearer towards year-end, Q4’16 volume improved and it was the third highest quarter of investment on record.

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The fallout from the U.K.’s vote to leave the E.U. bruised the Central London office market. Volume fell 50% to a five-year low and prices have started to fall. The sheer scale of London’s real estate market means it remains the biggest in Europe.

The Netherlands and Ireland saw record inflows in 2016, bolstered by acquisitions from investors headquartered in the U.S. Finland also had a record year and Helsinki had the best year-over-year performance of the Europe’s top 25 markets. Madrid moved into the top five bracket for the first time, pushing Frankfurt from the #4 slot.

Of the main property types, the industrial sector was the only one to grow in 2016 – up just 1% versus 2015. More than €100b of European offices traded in 2016, which is higher than the 10-year average of €80b but still a 20% YOY decline. Development sites performed worst, declining 38% YOY.

2016 was a record year for the alternative property sectors such as senior housing and data centers. Student housing outside the U.K. also had a banner year.

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Tom Leahy

Tom Leahy

Senior Director, EMEA Analytics
tleahy@rcanalytics.com

Tom joined RCA in 2014. In his role as Senior Director for the EMEA region, Tom is responsible for the development and expansion of the market analytics service for RCA’s European clients.

Prior to joining RCA, Tom was an Associate Director and then Head of Research at UK-based property consultancy, Lambert Smith Hampton. He started his career as an analyst at research consultancy Property Market Analysis (PMA).