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Property transactions pick up as investors eye up bargains

Property transactions pick up as investors eye up bargains

Commercial property transaction volumes in the UK and Europe have been ticking up over the past quarter, with a number of large institutional investors snapping up assets.

Several are reporting notable shifts in the locations investors are backing, though, with economies across Europe growing or slowing at distinctively different speeds.

AXA Real Estate Investment Managers says it completed €2.13 billion (£1.88 billion) of transactions in Europe in the first half of the year, some €1.19 billion of which comprised acquisitions.

The group said there had been a change in the geographical focus compared with 2010. Some 46% of its acquisitions took place in the UK compared with 25% last year and 19% in France compared with 18%. That said, 60% of the €939 million of sales it completed were in France, marking a major net move out of the country.

Notable transactions in the first half of the year included the acquisition of 20 Gresham Street, a fully let 240,000 square foot prime central London office, and 28 petrol stations in northern Spain. 

‘We have continued to accelerate our transactional activities following the progress we made last year, delivering a number of key deals to support our clients’ strategies,’ says Anne Kavanagh, global head of AXA Real Estate Property Services Group. ‘We have completed 80 transactions in the first half of the year, only made possible by our specialist in-house teams located across our key territories.

‘With a further €3 billion of deals already at various stages of due diligence, we expect to continue our strong momentum for the rest of the year.’

Reflecting the growing liquidity in continental European markets, the Peakside Real Estate Fund 1 has just sold a combined retail, office and residential complex in Berlin’s Kurfürstendamm, one of the city’s main central thoroughfares.

The fully let 4,000 square metre building, which Peakside bought in 2008, was sold for £12 million, a 15% premium to its latest valuation.

‘The current focus by investors in the German market on narrowly defined core products creates an outstanding market opportunity for us to exit stabilised assets at or above target prices,’ says Stefan Aumann, head of asset management at Peakside Capital. ‘The sale will enable us to reinvest the proceeds in more attractively priced product both within Germany and elsewhere in Europe.’

In terms of locations for new investments, the Belgian and Dutch industrial markets are leading the way, says Capital Economics property economist James Purvis, but he warns the strength of the low countries’ industrial sectors is unlikely to be sustainable in the short term.

‘The relatively strong macro drivers of industrial occupier demand in Belgium and the Netherlands are consistent with the fact that industrial rents in Brussels and Amsterdam are outperforming the rest of the region,’ he says. ‘However, we suspect that even the modest rental growth seen so far in both markets will prove temporary because, in common with the rest of the Eurozone, slowing industrial production growth and excess manufacturing capacity will prevent upwards pressures on rents from building.’

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