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European real estate investment surges 28% in Q1 as buyers widen search

Global Q1 volumes exceed $105bn for first time in five years


London, 14 May 2013 – The first quarter of 2013 saw high levels of direct real estate investment across Europe, building on the momentum at the end of 2012, as both international and domestic investors targeted real estate assets.

Transaction volumes in the large markets of UK, France and Germany grew as they retained the bulk of investor attention. This resulted in London, Paris and Moscow all ranking in the top 10 global cities by volume, accounting for $11.5 billion of the $40 billion total investment. Over 50% of transactions in these three cities was cross-border, as overseas investors sought to gain exposure in the largest European markets.

Richard Bloxam, Head of European Capital Markets at Jones Lang LaSalle explained: “Buyers are scrambling for opportunities in the largest European commercial real estate markets and this strong competition for the best product means we have seen a widening of search criteria, including location, asset class and risk level. The £142 million acquisition of One Angel Square in Manchester by RREEF Real Estate demonstrates investors will now consider regional opportunities that previously they might not have considered. This trend will increase throughout the rest of the year as supply in the largest city markets remains restricted and as debt finance restraints continue to ease.”

Activity was boosted by an increase in the number of large assets traded, which has driven the average real estate transaction lot size up to €47 million from €40 million a year ago. Transaction volumes for deals >€100m also grew 59% year-on-year to €16 billion, above the five year quarterly average of €11bn due to an increase in the number of portfolio transactions.

Commenting on international capital, Matt Richards, Head of International Capital Group – Europe, at Jones Lang LaSalle said: “Despite on-going discussions over its fiscal position, a buoyant US stock market is driving strong purchasing activity in Europe. $3 billion came into Europe from North America in Q1 2013, a similar level to the amount invested in Europe from the Middle East.  No amount of disappointing economic data seems to halt the steady flow of money targeting attractive yields on offer from European real estate.” 

Notes to Editors:

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Global forecast

The first three months of the year are traditionally the quietest for commercial real estate transactions. The $105 billion of transactions recorded globally in Q1 is the highest for five years. With this flying start and no predicted let up from investors, Jones Lang LaSalle predict 2013 total global volumes may reach $500 billion.