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European Commercial Investment by U.S. Institutions Increases 75 Percent in 2014

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2015-04-21

According to CBRE, price movements in the U.S., coupled with improving prospects overseas, have led U.S.-based investors to increase their commercial real estate acquisitions in Europe by 75% year-over-year.

Notwithstanding expanding investment volumes in domestic markets, U.S. investors significantly increased their activity in Europe in H1 2014 with $15.5 billion (€11 billion) of acquisitions, compared to more than $8 billion (€6.3 billion) in H1 2013. The U.K. attracted the majority of this investment (36%), with Germany (23%) and France (17%) also favored destinations.

The jump in buying activity from U.S.-based investors was the most significant shift in terms of buyer nationality in Europe, with U.S. buyers responsible for 63% of cross-regional investment in the region. Also notable, was the shift to positive net investment from U.S. investors. In recent years, sales have nearly matched acquisitions; however, in H1 2014 alone, acquisitions have exceeded sales by approximately $6 billion (€4.5 billion).

Chris Ludeman, Global President of CBRE's Capital Markets said, "While the volume of business in U.S. commercial real estate is expanding, price movements in domestic markets and improving prospects in the European economy have led U.S. investors to target Europe more ambitiously than has been the case in recent years. This investment is dominated by fund managers, rather than investors buying directly, so there is an extent to which they represent a conduit for global capital rather than just U.S. money. "

In Ireland, where the vast majority of transactions took place in Dublin, overseas buyers have been the main driver of growth in investment, with U.S. capital making the biggest contribution. Investors such as Blackstone, Hines and Lone Star all made significant acquisitions in Dublin in H1 2014, drawn in by the economic recovery story and prime yields that are attractive compared to other European capitals. U.S. investors accounted for 43% of the investment volume in Dublin in H1 2014.

U.S. investors have also increased their activity in the Netherlands--a market in which they have not traditionally been active.

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