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CBRE: EMEA buyers to invest more in real estate

Despite this commitment to real estate investment, one notable change has been a decline in investors’ appetite for risk

Nick Maclean, managing director, CBRE Middle East.
Nick Maclean, managing director, CBRE Middle East.

Real estate investors across the EMEA region intend to be very active in 2016, according to a recent report.

According to CBRE’s 2016 EMEA Investor Intentions Survey, almost half (48%) of all surveyed expect their purchasing activity to be higher than last year, compared with just 15% who expect to be less active buyers.

43% also expect their selling activity to increase, indicating a buoyant and liquid real estate investment market for the region in 2016.

Despite this commitment to real estate investment, one notable change has been a decline in investors’ appetite for risk. After three years of diminishing popularity, prime or core assets are back on the agenda.

The proportion of investors who see prime or core assets as the most attractive part of the market has jumped from 29% last year to 41% in 2016. This is partly explained by investors’ concerns over economic issues.

Diverging investor views were prevalent in the responses given for the most attractive country for real estate investment. Germany was the most frequent choice as investors’ preferred destination, with 17% of all responses. The UK was in close second place with 15.1%, followed by Spain (10.2%), Netherlands (9.9%), France (9.2%) and Poland (9.2%).

When it comes to investment in to the Middle East, Nick Maclean, managing director, CBRE Middle East, suggests there is a substantial mismatch between supply and demand: “Despite the significant development of commercial and residential property over recent decades, the number of commercial transactions involving foreign investors does not adequately reflect the interest in real estate in the GCC and if the relative illiquidity could be solved here, the UAE in particular would see substantial inbound capital flows.”

At a city level, London retained its preferred status, with 15.1% of all investors favouring the city, but the gap between London and other cities is closing. Madrid came second with 12.2%, closely followed by Paris (11.6%), Berlin (10.8%), Amsterdam (7.3%), Warsaw (7.0%), Milan (4.7%), Budapest (2.9%), Prague (2.7%) and Munich (2.4%).

Across the more traditional sectors, offices remained the favourite asset type with 37% of the responses. However it was residential assets which saw the biggest increase in investor interest, growing from 5% of preferences in 2015 to 12% in 2016.

Retail also fared well, and the recovery of consumer confidence and consumer spending has resulted in the proportion of respondents choosing retail increasing from 22% in 2015 to 27% in 2016.

Real estate debt is the segment that currently has the most market penetration with over 30% of investors already having some exposure and 22% actively looking for further investment.

Student Housing was the segment which attracted the most new interest. 

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