According to Cushman & Wakefield’s latest International Investment Atlas the global property investment market delivered €859 billion of transactions in 2013 – a 22.6% increase on 2012 and the highest total since 2007.
Global real estate investment turned a corner in 2013 with market activity and values picking-up as recessions ended, business sentiment rallied and increased liquidity affected most global markets. This strong annual performance has also helped to push prime yields back down to pre-crisis levels.
Looking forward to 2014, Cushman & Wakefield is forecasting a 13% increase in investment globally to €968 billion, with the US and Western Europe predicted to drive the uplift in activity.
“The Slovak market is also expected to perform well this year with both international and local buyers. Some deals, such as TAM’s acquisition of CBC 3,4 and 5 have recently concluded and a number of other transactions are expected to conclude or move into due diligence in the next weeks,” says Andrew Thompson, Head of Capital Markets at C&W Slovak Republic.
Diversity in Europe
In EMEA, while trends were diverse, the upturn was broader than in recent years. The UK and Germany are still driving the majority of regional growth but Russia, Italy, Spain, the Netherlands and Belgium are all posting marked increases. At the same time, markets such as France, Sweden and Poland did little more than keep pace with 2012 while Norway, Switzerland and Denmark all fell back.
In all regions, foreign investors grew in significance. Pension and sovereign wealth funds remain more focused on Europe than other regions with 59% of 2013 commercial investment heading towards EMEA followed by 28% for the Americas and 13% for Asia. Country targets were relatively similar for the two with the US and the UK dominating as they do for most investor types.
Europe: volumes set to increase by 12-13% this year
A strong final quarter drove volumes in EMEA to a six-year high of US$246.3 billion in 2013, 23% up on the previous year.
The story of the year was the bounce in activity in peripheral markets led by Southern Europe, which rose by 107%. Demand in the core remains high, supported by a greater availability of debt. Opportunistic investors have made their presence felt and foreign demand in general has been a key part of the renaissance of European markets, which are forecast to rise by 12-13% in 2014.
“The outlook for Slovakia is positive with both debt and occupier markets showing signs of an upturn and strong interest being shown across all sectors from investors,” says Andrew Thompson.
From a global perspective, a realistic appraisal of the macro environment should support further robust demand for property as an investment. This will be underpinned by the availability of debt and the supply of available product from profit takers, deleveraging banks, investors and developers moving up the risk curve as well as businesses and the public sector raising capital.
Pricing globally will also benefit from a slow return of occupier demand. This recovery is taking place more rapidly than many expected and speed is likely to remain a feature of the market.