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Thu 29 Aug 2013 02:33 PM

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Gulf investors drive European property market in H1

Regional buyers increase activity in Euro commercial real estate market, says CBRE report

Gulf investors drive European property market in H1
(Getty Images - for illustrative purposes only)

Middle East and North American investors are the major drivers of increased activity in the European commercial real estate market, according to the latest data by CBRE.

A report by the global real estate consulting firm said buyers from outside the region now account for more than a quarter of all transactions in H1 2013.

Investors from the Middle East increased investment activity, accounting for nine percent of the entire market and 21 percent of cross-border transactions in H1, CBRE said.

Capital from the Middle East is generally institutional in nature, with nearly half of the total coming from the region's sovereign wealth funds, it added.

The report said transactions from Middle Eastern buyers showed a strong bias towards London (nearly 50 percent of the total) and offices, although there were several large retail properties among the purchases made.

"London remains the destination of choice for foreign investors due to its solid growth potential and its status as a global financial hub, alongside its stable political environment and a transparent legal system, which are key for international and regional buyers alike," said Nick Maclean, managing director, CBRE Middle East.

Buyers from North America accounted for a steadily increasing share of the market (13 percent of the entire market and 24 percent of cross-border transactions in H1), the report added.

The total value of commercial real estate investment activity in Europe continued to grow in Q2 2013 at six percent higher than the total for Q1 2013.

The €32.6bn recorded over the quarter showed a 22 percent increase on the same quarter last year and was the highest Q2 total since 2007.

The level of cross-border investment in Europe continued to increase, both in absolute terms and as a proportion of the market as a whole.

Over the first half of 2013, foreign buyers accounted for 44 percent of all transactions (by value) compared to 40 percent in the second half of 2012.

A significant change has developed in the sources of cross-border real estate investment, with intra-European investment (where the buyer is from another European country) accounting for just 16 percent of transactions in H1.

Investment capital from outside Europe has become increasingly important to the market and now accounts for 28 percent of all transactions in H1 (from 19 percent in H2 2012).

Within Europe, German investors remained the largest group of cross-border buyers, according to the CBRE report.

Jonathan Hull, head of EMEA Capital Markets, CBRE, said: "The increase in the proportion of the market comprised by large transactions coincides with an increase in the amount of non-European capital flowing into the market. It has long been the case that buyers from outside the region are focused on larger than average assets and H1 2013 was no exception."

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