MIPIM 2016: London remains the most popular city in Europe for real estate investment, although on a country level Germany is now attracting the most attention, according to research by CBRE.
Unveiled at its Global Investment Forum at the Majestic Hotel in Cannes this morning, its EMEA Investor Intentions Survey shows that of the 423 investors surveyed 48% expected their purchasing activity to be higher than last year, despite some markets arguably reaching their peaks. Only 15% expected to be less active.
| Most popular European city for investment | % |
|---|---|
| London | 15.1 |
| Madrid | 12.2 |
| Paris | 11.6 |
| Berlin | 10.8 |
| Amsterdam | 7.3 |
| Warsaw | 7 |
| Milan | 4.7 |
| Budapest | 2.9 |
| Prague | 2.7 |
| Munich | 2.4 |
The positivity surrounding London was in spite of the referendum set for 23 June on the UK’s membership in the European Union, which has started to cause investors to become more cautious.
“The Brexit conversation is clearly hanging over us and we think it could be a year of two halves, prior to [the in/out referendum] on June 23 and one after. We think though there is still about £35bn of equity still targeting London,” said Chris Brett, head of international investment in the UK for CBRE at the launch.
“The biggest players globally in London for the past three years have been Asian investors and we see that trend continuing, but with a real shift from institutional capital to private capital,” he added. “There is a generational change happening with businesses in Asia and the Middle East wanting to diversify and looking for the safe haven London provides.”
There has, however, been a shift away from higher-risk assets as investors look to take a more defensive position further through the cycle. After three years of diminishing popularity, prime or core assets were judged the most attractive area of the market at 41%, compared with only 29% last year.
| Most popular European country for investment | % |
|---|---|
| Germany | 17 |
| UK | 15.1 |
| Spain | 10.2 |
| Netherlands | 9.2 |
| Poland | 9.2 |
Interest in central and eastern Europe has also swelled, with investors chasing yield and moving in to markets offering higher returns. Taken as a whole the region saw a dramatic uplift in interest, from 6% last year to 23% this year.
“Alternative” sectors, outside of the traditional office, retail and industrial markets, are fast showing their name to be outdated, with 56% already in one or more sectors. Real estate debt was the most popular alternative sector, with 30% invested,” said Brett.
To send feedback, e-mail david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette
