Brexit Risk Aversion Triggers 31 Per Cent Fall In H1 UK Property Investment
Escalating concerns over the economic impact of Brexit drove the quantity of property investment transactions in the united kingdom down by 31 per cent year-on-year in the first-half of 2019 to EUR23.4 billion. The wider slowdown across Europe was noticeable in a 15 % drop in deal volume to EUR114 billion between January and June, Real Capital Analytics’ (RCA) Europe Capital Trends Q2 report shows. Tom Leahy, RCA’s Senior Director of EMEA Analytics, says: “The politics process encircling Brexit is clearly unsettling property traders in the united kingdom market, who are becoming risk averse more and more.
But we also noticed transaction volumes sluggish generally in most major European marketplaces in the first-half of 2019, with the notable exceptions of Spain and Sweden. That slowdown was magnified by the sharp declines in retail investments, but excluded defensive segments such as apartments, hotels, senior housing, and care homes. European retail real property transaction quantity dived by 51 % to total EUR12.6 billion in the first six a few months of this 12 months. The retreat in this property sector, which has been most marked in the UK, due predominately to the challenge presented by e-commerce and the extended Brexit process, now is apparently echoing across Europe.
Investors look like switching out of retail property in to the more protective ‘Beds’ areas – apartments, hotels, senior housing, and care homes. German organizations continuing to top the rankings of investors in European real estate in H1 and on a moving 12-month basis their investments are in record levels. But an added group that is conspicuous in their lack from the very best 10 list are Chinese and Hong Kong-based traders. Between 2013 and the final end of 2017, these investors spent over EUR50 billion on European commercial property, but domestic capital restrictions mean buying has practically ground to a halt.
For the very first time, they have grown to be net sellers in European markets. Chinese and Hong Kong traders sold EUR3.2 billion in European possessions in the first-half of 2019 versus acquisitions of just EUR1.0 billion. In the united kingdom, April to June was the slowest one-fourth for property investment since 2012, and both cross-border and local investment levels are in a six-year low. France fared relatively much better than the other large European real estate investment markets in H1, although transaction volumes were down 11 % year-on-year.
The Paris office market was buoyed by an influx of capital from South Korea, with more than EUR2.0 billion of deals in the first-half concerning a South Korean customer. Germany retained the very best slot as the most active European nationwide investment market in H1, prior to the UK slightly, but deal volume fell by 21 per cent due mainly to declining office transactions. Cumulatively, the biggest seven German city office markets ended 2018 at record levels, however the first half a year of 2019 were gradual particularly.
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In Frankfurt, deal volume dropped by 50 %, with only two EUR100 million-plus deals completed. RCA has documented three pending deal completions totaling over EUR1.0 billion for Frankfurt in the second-half of 2019, so the market should recover some ground in coming months. Spain and Sweden both stick out among the group of the largest European investment markets as documenting increased investment quantities in the first-half.
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