According to Savills latest research, intra-European cross border investment remains the dominant source of cross border capital, accounting for just over half of all cross-border volumes in 2023.
This is the equivalent of €34bn and included significant investments from French and Spanish buyers in neighbouring countries who are expected to remain active this year.
The international real estate advisor has highlighted that investors from Japan, Taiwan, and Israel, as well as those from North America, are ones to watch this year.
The UK, Germany, and Spain were the three largest destinations targeted by cross border investors, accounting for 61% of European cross-border volume, says Savills.
Lydia Brissy, Director European Research at Savills, says: “Logistics is set to retain its status as the preferred asset class among cross border investors across Europe, with multifamily and other residential sub-sectors gaining traction, particularly in Northern Europe. We anticipate sustained cross-border appetite for prime high streets and hotels situated in key tourist destinations, as well as a growing interest in retail warehousing in prime urban shopping centres, especially in southern and eastern Europe.”
Emma Steele, Director, Global Cross Border Investment at Savills, says: “In the first part of 2024 we expect to see international investors strive to capitalise on locations and sectors where there continues to be pricing dislocation. Whilst the UK was a ‘leader’ in terms of price adjustments, wider continental Europe is catching up and though we expect to see the UK solidify its leading position as the primary beneficiary of cross-border investment, we are sure to see more cross border trades in other jurisdictions as well.”
James Burke, Director, European Capital Markets & Global Cross Border Investment at Savills, says: “We expect to see an uptick in intra-European capital deployment during the course of 2024, underpinned by sustained activity at smaller individual lot sizes across all asset classes from French retail funds. Geographically, on account of muted domestic investment in Germany, we predict that cross-Rhine investment by SCPIs will increase as entities look to rebalance portfolio compositions which were light on exposure to the German market due to historic pricing levels and local competition. This activity across the continent will likely be complemented by Spanish outflows, in particular for the acquisition of prime office stock by HNWIs and insurance companies, as was witnessed during the latter half of 2023.”
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