Amidst a decline in overall European investment in Q1 2012, cross-border acquisitions by global investors continued to increase on both a total and net basis. Acquisitions by continental investors also continued to increase, but their dispositions exceeded acquisitions for the past six quarters
Cross-border investors made €13.5b of acquisitions in Q1 2012 and have been responsible for €55.5b of property acquisitions, or 43% of total transaction volume in Europe over the past year. Approximately half of cross-border activity is continental, involving European investors, and half is from global investors based in other continents.
Total acquisitions by global investors have remained relatively constant over the past year but net acquisitions, which incorporate disposition activity, are trending higher. Over the past year, global investors have added to their holdings by acquiring €9.0b more of European property than they have sold.
Total acquisitions by continental investors continue to increase but they are still just a third of peak levels. However, net acquisitions have been negative for six consecutive quarters as many European investors continue to reduce property exposure and shed assets.
Investors based in the UK and Peripheral countries were the largest net buyers at the peak and are currently the largest net sellers in Europe. Selling activity by German lenders and the open-end funds could pull Germany into negative territory.
Nordic investors are currently the largest net buyers in Europe and along with the French are the only two European groups where net acquisitions are trending higher. Nordic sovereign wealth funds are fuelling the acquisition activity from this region, with the pending Meadowhall shopping centre deal in Sheffield a strong indication that this trend will continue.
Sovereign wealth funds from Asia and the Middle East are also playing a significant role in the European property markets. Capital flows from the Middle East have rebounded strongly over the past year and capital from Asia is also poised to grow.