Catella: EUR 515 Bn global real estate capital knocking on Europe’s door

Compared to the year before the last financial crisis, 2007, the volume of capital looking to invest in European real estate has doubled, from EUR 250 Bn to EUR 515 Bn in 2014. Global investment fund managers claim that Europe is their main target market in the next 12 months. 

“We see this large volume of capital changing the investment markets in Europe in the medium term.” says Thomas Beyerle, Group Head of Research at Catella. “As capital spills over from traditional Europe investment centres London and Paris in the next 12 months, we expect to see increasing investment activity in Germany, the Nordics and Spain.”

Catella’s research indicates that cross-border activity between these markets will gain momentum and the investment markets become more increasingly international. Domestic investors will be challenged by the new investors attempting to enter these markets. The reasons why this large investment volume is targeted at the European market now are complex. It is not only thanks to the high liquidity provided by the FED and ECB, but also because of:

• Poor performance of the bond and fixed income markets
• Need for stabilized investments in the long run
• Over-allocation from Asian fund managers into Europe’s economies
• Strong increase of Chinese investment capital into real estate in Europe and US
• New targeting of Middle Eastern capital, especially sovereign wealth funds out of London and Paris
• Slightly increased interest from US investors and private equity funds, and Canadian Pension funds

“While the figures seem dramatic and impressive, we expect about half of the capital to actually find its way into the markets in the end. The reasons are shortage of core segment properties, mismatched price expectations and complex regulations that hamper new funds’ investment ability. Therefore, our forecast for 2014 is positive but cautious, predicting a European transaction volume of around EUR 215 Bn, which is slightly lower compared to 2007, but an increase of 53 percent compared to 2013.” says Beyerle.

Catella provides high end market analysis products and services for the real estate market. We use our perspectives from the financial markets and experience from investment banking to create truly forward-looking research. Catella’s research operations are led by Dr. Thomas Beyerle, Group Head of Research. 

For more information, please contact:
Thomas Beyerle
Group Head of Research
+49 69 31 01 930 220, +49 172 52 55 909
thomas.beyerle@catella.de

Press contact:
Ann Charlotte Svensson
Head of Communications
+46 8 463 32 55, +46 72 510 11 61
anncharlotte.svensson@catella.se

About Catella: Catella is a financial advisor and asset manager with specialist expertise within property, fixed income and equities. We have a leading position in the property sector and a strong local presence in Europe, with some 450 employees in 12 countries. Catella is listed on Nasdaq OMX First North Premier. Read more at catella.com.

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