Top EU commercial property locations revealed
The latest statistical analysis from industry leading estate agents Knight Frank confirm established EU centres as safest investments.
Germany and the Nordic countries maintained the highest levels of investor activity, whilst interest in the UK and France property markets has centred on larger commercial districts such as Paris and London.
Buoyancy in these regions has been driven by demand from high net worth individuals as well as sovereign wealth funds in recent months, whilst speculative investments in regions such as Greece, Spain, Portugal and Italy have fallen by the wayside following continued turbulence in the Eurozone.
However, statistics from market researchers Real Capital Analytics showed renewed interest in the Irish commercial property market following a dramatic re-pricing, with German investment firm AM Alpha revealing plans to expand their multi-million pound serviced office portfolio in Ireland following yields of over 7% in established business centres.
Pricing at the higher end of the market has generally remained stationary, although yields in Madrid and Milan moved up by 25bps in Q2. Secondary assets have continued to weaken as investors seek to avert further risks.
Darren Yates, partner in Knight Frank’s research team, said: “Investors are clearly concerned about the possibility of a Eurozone break-up and the recent sharp fall in activity in the peripheral markets reflects this. That said, with property continuing to offer a significant premium over bond yields, the case for investing in real estate remains strong.”
Knight Frank’s head of European investment, Andrew Sim, echoed his sentiments saying: “The core markets have remained buoyant and none more so than in London. Despite continued worrying levels of tenant ‘inactivity’, we have even seen prime yields harden under the ever-increasing flow of international capital.”
He continued: “However, core product is scarce and this lack of product has encouraged some to widen their investment horizons and even take on a ‘little risk’ for an appropriate discount. We believe this ripple is set to continue, with investors gently drifting towards more ‘added value’ opportunities in the strongest markets, with a positive increase in core activity in the tougher European economies.”
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