Press Releases

Europe’s Resurgent Pandemic Stifles Commercial Property Deal Flow in First Quarter, While ‘Beds and Sheds’ Investor Portfolio Rotation Accelerated – RCA

Real Capital Analytics / May 4th, 2021

London, April 29, 2021 – Europe’s commercial property sales were suppressed by renewed lockdowns in the first quarter, down almost one-third compared to the same period in 2020, the European Capital Trends Q1 2021 report from Real Capital Analytics shows. But the headline market slowdown did not interrupt investors’ ongoing portfolio rotation towards apartments and industrial properties, which together represented almost 50% of all deals in the quarter. This rotation was at the expense of retail investment, which slowed to levels last seen in 2009, and office investment.

Sweeping lockdown restrictions restrained overall European commercial property deal flow to €53.3 billion, a 32% decline year-over-year. The greatest beneficiary of the sector rotation trade was apartments, which recorded the highest sector deal flow in the quarter, up 36% compared to the same period 12 months ago, to €16.1 billion. Industrial and logistics sales were resilient, relative to the market-wide slowdown, although sales slipped back 7% year-over-year to €10.3 billion. Niche property sectors, such as student and senior housing, grocery retail, data centers and life sciences, collectively gained in market share, comprising more than 11% of all investment in the first quarter.

Office sales in Europe plunged 58% year-over-year to €14.5 billion, representing just 27% of the quarterly total, the lowest proportion on record. Similarly, retail investment sales in Europe slumped 60% year-over-year to €4.1 billion. RCA data shows a spike in retail conversion trades in the first quarter, which could prove to be the early signs of an emerging trend.

Tom Leahy, RCA’s Senior Director of EMEA Analytics, said: “One year on from the onset of the pandemic and European commercial property investment continued to slow as investors realigned portfolios to asset classes supported by structural tailwinds, including demographics and technology.

“European investment sales declined by almost one-third in the first quarter, but the headline figure masks huge variation. Deals in the apartments sector soared 36%, while investment in offices and retail plunged around 60%. At the same time, niche property sectors, like grocery retail, data centers and life sciences, continued to gain in market share. Collectively, the trends are redefining what constitutes a contemporary real estate investment portfolio.”

Paris Offices Remain Europe’s Dominant Asset Class, while German and U.K. Offices Slump

Germany narrowly retained its status as the most traded market among Europe’s top three, despite quarterly volumes falling back 35% year-on-year to €12.7 billion. In Germany’s ‘big seven’ office markets, only €2.1 billion worth of stock changed hands, marking the slowest quarter since 2013.

The U.K. posted a shallow 13% decline in quarterly sales compared to Q1’20 – which itself was a relatively weak quarter – to €12.0 billion. The performance comes against a backdrop of severe national lockdown restrictions imposed at the end of last year. More than 50% of transaction volume in the U.K. was in the apartment and industrial sectors, with €2.5 billion spent on apartments. Similar to Germany, U.K. office deals slumped to one of the slowest periods on record, according to RCA data, at just €1.9 billion, as investors remained cautious with most office-based workers at home.

By contrast, France’s office sector represented more than 50% of all first quarter investment volumes. However, the French market overall slipped 30% to €7.5 billion. The bulk of French office trades were in Paris, strengthening its position as Europe’s number one asset class. Office transaction volume in Paris was double that of second-placed Berlin apartments and three times that of third-placed London offices, RCA data shows.

Elsewhere, Denmark has emerged as one of Europe’s outperformers during the pandemic period, culminating in the strongest quarter ever for transaction volumes, according to RCA data. Deal activity totaled €3.6 billion in the first quarter, making Denmark the fourth most active European market of the year so far. Denmark has benefitted from exceptionally strong cross-border investor demand for apartments. Ireland also bounced back from a very lackluster 2020 with commercial property sales up 81% year-over-year to €2.0 billion.

Tom Leahy, RCA’s Senior Director of EMEA Analytics, said: “The pandemic sapped momentum in Europe’s commercial property markets in the first quarter, prompting more than half of the markets RCA tracks to post year-on-year declines.

“Overall, Covid-19 has caused a slowdown in cross-border investment across Europe. In the last 12 months, U.S.-based investors spent almost €20 billion less compared to the previous 12 months, followed by South Korean players, for whom the gap was €12 billion.”

Tom Leahy, RCA’s Senior Director of EMEA Analytics will discuss these trends and more in a Real Capital Analytics webinar on Wednesday 5 May, at 9am BST/10am CEST. Journalists wishing to join the webinar can register here.


Note to editors:

Real Capital Analytics is the authority on the deals, players and the trends that drive the commercial real estate investment markets. Covering all markets globally, RCA delivers timely and reliable data with unique insight into market participants, pricing and capital flows. The most active investors, lenders and advisors depend on RCA’s market intelligence to formulate strategy and to source, underwrite and execute deals. An industry pioneer since 2000, RCA has offices in New York, San Jose, London, Amsterdam, Stockholm, Singapore, and Sydney. For more information, visit


Siobhan Crise, Managing Editor, Real Capital Analytics