According to the latest RCA figures, domestic and cross-border investment between European countries into the region’s real estate is on the rise at the expense of international investors. The former accounted for 79 per cent of volumes in H1 2020 compared with 76 per cent in 2019 and we expect competition between European investors to become fiercer as the year progresses.

One reason is of course the travel restrictions that have been in place, but with many US and Asian investors having offices or partners in Europe (and thereby not being affected by travel restrictions) the more likely explanation might be the weight of capital that European investors have to spend before the year comes to an end. 

Furthermore, there is no denying that domestic investors often have much better market knowledge, part of the reason why they have been dominant in Germany and other European countries for so long.

However, the data also shows that there are some surprise candidates when it comes to intra-European investment. For example, according to RCA data, the biggest European investor group into Central and Eastern Europe (CEE) last year was not German or French but Austrian, acquiring assets worth €1.7 billion in 2019 (up from €1.3 billion in 2018). 

Less surprising given their size and liquidity is that the traditional key cities – London, Berlin, Paris and Frankfurt –continue to dominate as the preferred destination for capital, which is why they also rank so highly on our recent Covid-19 European city resilience index.

Recent deals completed in those cities include KanAm Grund Group’s LEADING CITIES INVEST buying the refurbished Mebes House in Berlin in June, with Savills advising; Deka Immobilien buying the Sainte-Cécile office property in Paris for €165m in July; and neocapital selling the SAP building in Eschborn, Frankfurt, to a German real estate fund for €68 million, also in July. 

With interest rates continuing to remain at record low levels and demand for high quality assets outstripping supply, we can expect to see strong competition for European real estate to continue throughout the year. European investors may well be the ones to watch in the fight for the prize. 

Further information

Contact Tristam Larder

Read more: European investment: Which European cities will be more resilient to Covid-19?