European total commercial and residential investment volume reached a total of €111bn in H1 2019, 16% below the equivalent level last year, and 2% below the long-term average for the first half. Annualised investment fell 3% from €282bn for the year to Q1 2019 to €274bn in Q2 2019. In two thirds of the countries we survey, investment volumes were below their respective levels for H1 2018, whilst investment levels were higher in Greece (+120%), Czech Republic (+59%), Italy (+44%) Ireland (+34%), Sweden (+42%), Norway (8%) and France (3%).

The proportion of investments allocated to the three core countries decreased from 63% in H1 2018 to 60% in H1 2019, to the benefit of the Nordics countries (14%-18%), Southern Europe (9%-10%) and at a lesser extend to CEE countries (3.5%-4%). This is an indication that the price level may have become a drag on investment activities in core countries.

Despite the US remaining the largest cross border investor into Europe, South Korean investors acquired a total of €6.2bn in H1 2019, up from €5.4bn for the full year last year and the highest year on record.

Offices remain the preferred asset class, totalling €44.4bn, which is 41% of the total compared to 37% in H1 2018. Strong labour markets in nearly all European countries and the rising need for modern space to adjust to the new flexible ways of working are the main drivers for the sector. Logistics investment totalled €12.4bn, 16% down on last year level but still accounting for 11% of the total European investment volume. In the current challenging context of the retail industry, retail investments decreased by 28% compared to H1 2018 year, now accounting for 15% of the total compared with 17% last year.

The low interest rate environment will continue to offer an attractive yield spread for prime commercial products. But as the European economy is slowing down and geopolitical uncertainties are rising, investors will increasingly scrutinise the fundamentals backing each investment opportunity to justify for its price level. In this context, we expect the 2019 European investment volumes to reach €241bn by the end of the year, which will be approximately 18% below last year’s turnover.

_{Read the articles within Spotlight: European Investment 2019 below.}