The end of 2013 saw the highest investment volumes since the beginning of the crisis in 2007. In total, approximately €141.4bn was transacted, 22% more than in the year before. The second half of the year was particularly strong, at almost €85bn, placing it 29% above the 2012 result and making it the strongest half year since H2 2007.
After these record transaction levels achieved in 2013, Savills have predicted that activity will normalise across most markets, but the total investment volume in the survey area will increase slightly by 4% year-on-year.
The total transactional volume in 2013 was £54bn, a 57% increase year-on-year. This made 2013 one of the most active years in the last 20 years, and only around £4bn behind the most recent peak that was reached in 2006. London continued to be the most popular market, with £20bn in 2013, and a total of nearly £30bn in the Greater London market.
However, the big change in 2013 was in investor interest in the markets outside London, with the proportion of total investment that was spent in the regions rising from 41% to 45% in 2013.
Germany recorded its highest transaction volume since 2007 in 2013, with more retail transactions and investments into office properties than previously recorded. The lack of core properties in the market resulted in extremely strong demand, which in turn caused rising prices and contracted yields.
The investment market is expected to remain highly dynamic in 2014, with open-ended special funds representing large groups of buyers (if the trend from 2013 is to be followed), although the lack of prime product will be a limiting factor.
Countries such as France, Sweden and Spain are all expected to see a double-digit investment volume growth in 2014, which is a return to normality for the first two countries, and confirms the ongoing interest of investors in the latter.
The report also states that 2014 will see continued high demand for prime investment opportunities, with interest from cross-border buyers adding further pressure on pricing levels. It is predicted that a more diverse group of buyers will be looking into markets outside the core, both on local and regional levels.
Prime yields will stay stable across most sectors and markets with some notable exceptions: further hardening of all yields is expected in Germany – the safest haven, additionally boosted by strong business and consumer sentiment - and Ireland – which is right on the radar of global investors.
Extracts taken from Savills’ European Investment Market Report, March 2014 – read the full report