The Q4 activity brings the total 2009 turnover to €70billion, compared with the €121billion reported for 2008 as a whole. CB Richard Ellis expects the European investment market to continue this growth in 2010.
Traditionally, Q4 is the busiest quarter of the year, therefore seasonal effects have also played a part in these activity levels. Many European markets saw a rush of deals being completed towards the year-end. Overall, 17 out of the 26 monitored markets reported Q4 as having the highest quarterly turnover in 2009.
A very sharp turn-around in activity occurred in Europe during the course of 2009. Following a recovery in sentiment from around April, completed transactions picked up strongly from mid-year, with investment deals totaling €43.9billion completed in the second half (H2) – a 71% total increase compared to the first half (H1) of the year in Europe.
Almost every market saw an increase in investment activity quarter-on-quarter in Q4, as well as on a half-yearly basis. Most notable was the fact that transactions in both France and Germany – the two largest markets in continental Europe – more than doubled in H2 compared to H1 2009.
CEE experienced a particularly sharp uplift (of 231%) in H2, but this was coming from a very low base. Investment in the UK continued to increase, with H2 growth of 64% relative to H1 2009. This was below the European average, but reflects the fact that the UK market had already started to recover by the middle of the year, earlier than most other markets.
The recovery in overall turnover has also featured a revival in cross-border investment activity, after a first half which was dominated by domestic investment. The German Open-ended Funds alone spent over €1billion in December 2009, with at least 13 separate acquisitions spread across seven European markets. Sovereign Wealth Funds also contributed to the uplift in Q4 activity, including the completion of one of 2009’s largest single asset deals – the €860million sale-and-leaseback of HSBC’s tower in London’s Canary Wharf, acquired by the National Pension Service of Korea.
Michael Haddock, Director of EMEA Capital Markets Research, CB Richard Ellis, said: "Despite the increase in investment activity across Europe, investor interest is still fixated on prime product and the most liquid markets. As a result of tight supply and expanding demand there were further widespread falls in prime yields, although the spread between prime and secondary has increased."
Jonathan Hull, Executive Director of EMEA Capital Markets, CB Richard Ellis, said: "Although most markets were dominated by local investors in the first half of 2009, the second half of the year saw a significant reversal with the influx of a variety of equity from across the world. In addition to the established investors such as the German Open-ended Funds, we have witnessed strong interest from Sovereign Wealth Funds and private equity, recognising value in many European markets, particularly when compared to cash returns available in local markets."
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