Investors brushed aside concerns about the impact of the omicron variant to make the final quarter one of the biggest of 2021 for European property, with major markets posting near-record trading volumes, according to the latest capital markets snapshot for Europe, the Middle East and Africa (EMEA) released by Colliers.
Industrial and logistics scored across the region
In France, the final quarter transformed the picture for 2021 as a whole, accounting for 41% of the annual transaction volumes. It was Germany’s second-strongest final quarter in the past 10 years, while in Italy the sale of the Reale portfolio for €1.3 billion to Blackstone marked the country’s biggest property deal of the past 10 years. In the UK and Ireland, investment rebounded to levels not seen since before COVID-19.
Industrial and logistics assets once again proved a magnet for investors seeking to tap into the economic shifts accelerated by the pandemic. Despite this, there was no shortage of interest in office properties in prime markets such as Germany and the UK. “Investors clearly expect offices to remain central to the workplace, especially given rising awareness of the downsides of remote working, and that omicron appears less virulent than previous COVID-19 variants,” said Luke Dawson, Managing Director, EMEA Cross Border Capital Markets.
There were also signs of renewed appetite for hotel and retail assets, which were hit badly by the pandemic, notably in Mediterranean states. “In markets like Italy, it’s notable that investor interest in hospitality venues is now much stronger, despite the pandemic not having resulted in any broad price reductions”.
The eagerness of investors to deploy capital is such that many markets are facing supply-side constraints going into 2022. “It’s becoming difficult to find acceptable yield in sectors like logistics and core offices in some markets,” said Richard Divall, Director, Cross Border Capital Markets. “This may encourage investors to shift towards segments that were more overlooked in 2021, such as retail, or to explore broader segments of the risk curve.”
Exciting time for the Czech Republic
Andy Thompson, Head of Capital Markets, Czech and Slovak Republics Colliers, said: “In the Czech Republic, transaction volumes and potential transactions definitely improved in recent months and going into 2022 we expect that changes to inflation, the cost of financing and increasing 10-year bond yields (as a proxy for risk-free rates) both in the Czech Republic and wider EU will drive transactions. It feels like a very exciting time in the market with these macro changes coupled with (hopefully) the waning of covid-19 and hence the rebirth of tourism and retail spending.”
