GLOBAL - Germany has overtaken the United States as the single largest investor in European commercial property, accounting for almost 30% of total purchases in 2002.
According to property advisers, DTZ Research, European investment markets hit peak levels last seen in 2000 with total cross-border investment reaching E31.5bn.
German cross-border investment accounted for almost E9.3bn or 29% of the total. Meanwhile investment from the US was E8.6bn or 27% - its lowest level since 2000 and significantly below the E11.3bn recorded for the previous year.
Germany accounted for six of the top ten investors, with CGI Haus Invest leading the pack with around E2bn in commitments.
Peter Collins, director, DTZ EuroInvest, said: “It is expected that investor appetite for European commercial property will remain strong over the next 12 months.
“Furthermore, property externalisation deals in the form of sale and leasebacks, outsourcing and disposals are likely to be one of the major features of 2003 and beyond as businesses seek to take their non-core property assets off their balance sheets and reallocate capital.”
The UK remained the most favoured location attracting almost E10bn or 33% of total investment activity in 2002. Its dominance is expected to continue into 2003.
Nick West, director, DTZ EuroInvest, said: “The UK's position as the preferred investor location is unsurprising and underlines the continuing attraction of the favourable UK lease structure, market transparency and liquidity and comparatively attractive returns.
UK investor activity increased to 8% of total investment. Irish investment remained constant at 4% and France’s volumes stayed high at 23%.
Offices continued to be the property type of choice, reflecting almost half of all activity across Europe.
According to Peter Collins, a number of domestic legislation changes across European countries could prove a catalyst for the growth of cross-border activity.
“In the recent Irish budget, stamp duty was increased from 6% to 9% and proposed tax changes in Germany could both dampen investor interest on a domestic level but will also in turn encourage further cross-border purchasing by both the Irish and the Germans.”
Furthermore, DTZ believes that EU accession states in central and eastern Europe will prove increasingly attractive over the next few years due to relatively low transaction costs and strong rental growth prospects.
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