PRESS RELEASE
REAL ESTATE INVESTORS’ PURSUIT OF YIELD WILL BENEFIT
NEW MARKETS AND SECTORS IN 2015
- Alternative Real Estate Assets Go Mainstream - Italy and France See Biggest Movement in Investor Sentiment –
- London Remains Investors’ Preferred Destination -
Cannes, 11 March 2015 - The search for yield is having a significant impact on European
commercial real estate (CRE) investment according to CBRE’s 2015 Investor Intention’s Survey.
As prime yields continue to improve, CRE investors are diversifying their investment strategies
and also moving up the risk curve.
This diversification has led to an increased interest in ‘alternative’ real estate. Real estate debt
has seen the most dramatic increase in activity over the last two years, from under
€10 billion in 2012 to €49 billion in 2014 and is set to remain the preferred alternative choice this
year. 32% of respondents stated that they will actively be pursuing opportunities in real estate
debt in 2015, closely followed by student accommodation (27%), leisure/entertainment and
healthcare (both 17%) and retirement living (15%).
Are you actively pursuing investment in any of the following alternative sectors?
Of the traditional sectors, offices remain the most popular asset class by some margin, accounting
for nearly half of all expected investment activity in 2015. However, there was also a noted
preference this year for industrial and logistics assets, which is well in excess of the overall
amount of investable stock, suggesting that demand is much greater than supply for this asset
class.
CBRE Press Release
Unsurprisingly, given the level of interest in real estate and the capital value growth that has been
seen in recent years, access to competitively priced stock is the biggest problem for investors
today. Nearly all (91%) investors cited one of ‘availability of assets’, ‘asset pricing’ or ‘competition
from other investors’ as the biggest obstacle to activity.
This has also led to a shift in the types of assets being pursued and a move up the risk curve.
Investors’ preference for good secondary has now overtaken prime by a small margin. However,
the most interesting change is the strong jump in the attractiveness of value-add and opportunistic
assets, 10% higher than in 2014, and now top of investors’ wish lists.
At a country level, the UK remains the most attractive market for real estate investment in Europe,
selected by 31% of all respondents, with Germany and Spain sharing second place on 15%.
Beyond these top three results, which closely mirror investors’ preferences in 2014, there have
been some substantial shifts. The largest change this year was the 10% of investors who
selected France as EMEA’s most attractive market, up from just 5% last year. Italy also saw an
increase attracting 6% of responses up from 4% in 2014. Both countries experienced a significant
jump in investment activity in the final quarter of 2014, and in the case of Italy very nearly half the
year’s turnover was seen in the final quarter, suggesting further investment growth in France and
Italy this year.
In EMEA, which country/region do you believe to be the most attractive for making
property investment purchases in 2015?
Respondents’ selections for city preference closely followed country level preferences. London
was the most frequently chosen option at 30%, with Madrid second at 14%. Paris also produced
a strong result with 10% of investors rating it as their preferred market and another significant
mover was Milan, which attracted 5% of preferences. The main German cities combined were
considered the most attractive investment location by 14% of respondents. In keeping with the
theme of greater diversity of investment, cities outside the top ten attracted a substantial share of
investors’ preferences, 19% in 2015 versus just 9% in 2013.
CBRE Press Release
CBRE Press Release
Jonathan Hull, Managing Director of EMEA Capital Markets at CBRE, commented:
“Investors are constantly having to evolve their investment strategies, in their pursuit of yield and
returns, as demand for European commercial real estate shows no sign of abating. This
diversification is leading investors into new markets and sector. However, there is still significant
demand for core locations and assets, particularly from the growing influx of capital from outside
the region.
“Interestingly, a large proportion of respondents stated their intention to increase their overall
trading activity, across a broader spectrum of risk, this year. This movement up the risk curve
should benefit a far wider range of markets and sectors across the region.”
Richard Barkham, Global Chief Economist at CBRE, added:
“Despite the fact that core real estate prices are now markedly higher across most of Europe than
a few years ago, investors are still strongly attracted to the region. This is not surprising given the
spread of property yields over government bond rates. When compared to other territories,
Europe still appears to offer the best value.”
ENDS
Media Contacts
Natasha Sunderland, CBRE
+44 20 7182 3688 / +44 7795 010209
natasha.sunderland@cbre.com
Rebecca Allen, CBRE
+44 20 7182 3727
rebecca.allen@cbre.co.uk
For EMEA/international news follow us on Twitter: @CBRE_EMEA
Survey Method and Composition of Responses
The survey was carried out between 6th January 2015 and 6th February 2015, with a total of 280
responses spread across a range of types of real estate investors. The most numerous were fund/asset
managers, who accounted for 47% of survey participants. A further 13% were pension funds, insurance
companies or sovereign wealth funds. The other most numerous respondents were private property
companies (10%), listed property companies/ REITs (10%) and private equity/venture capital firms (10%).
The respondents were predominantly from Europe (85%). UK-domiciled investors were the most numerous,
making up 42% of the total, with Germany (14%) the next biggest group. The respondents from outside
Europe were mainly from North America (12%).
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is
the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The
Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors
and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice
and execution for property sales and leasing; corporate services; property, facilities and project
management; mortgage banking; appraisal and valuation; development services; investment management;
and research and consulting. Please visit our website at www.cbre.com.