Global real estate advisor, CBRE, has reported that the UK suffered a – 25% investment deficit during 2020 amidst the economic fallout of COVID-19.
According to data shared with Commercial People in CBRE’s 2020 roundup of European CRE investment volumes, the UK had a total investment volume of €45.8bn, making it the second-largest investment market across the continent.
However, despite the seemingly impressive ranking, the figure represents a 25% fall from the previous years total of €60bn, and an even greater fall from 2018 when the total reached €74bn.
Across Europe, the total investment volumes reached €275bn – down 17% compared to 2019, which reads better than expected, given the economic uncertainty caused by the ongoing pandemic.
Germany saw the highest investment level in the continent with total investment volumes reaching €79.3bn (down just 5% on a record-breaking 2019).
Meanwhile, France was the third-largest market, although volumes there fell 39% vs 2019, totalling €29bn.
Despite downturns elsewhere in Europe, the Nordics also had a strong performance, with total investment volumes reaching €43.4bn (up 1% on the prior year.)
Chris Brett, Managing Director, EMEA Capital Markets, CBRE commented: “Covid-19 was a black swan event that has had a significant impact on the real estate investment market. The ongoing immunization process is providing the market with some much-needed optimism, but the start of the year has been challenging with high infection rates across Europe.
“Structural drivers will continue to affect the market, and as such, we expect the strong appetite for Logistics and Multifamily assets to continue. We also expect to see strong demand for core Office properties that provide high-quality amenities for occupiers, particularly around wellbeing and ESG, as well as the ongoing demand from Life Sciences assets.
“This could result in yields tightening for these types of asset(s) as demand is strong and will increase further once travel restrictions are loosened. Core+ office space is expected to see further repricing and is likely to start offering great value for investors toward the middle of 2021.
“Following the agreement of a Brexit deal, we anticipate higher demand for UK assets than we saw in 2020 with deeper and more geographically diverse bidder pools emerging for best in class assets.”
As we previously reported for the UK market, the Industrial sector demonstrated impressive staying-power during the year in Europe, with the Healthcare, and Multifamily sectors also proving resilience throughout the pandemic. Investment volumes across the three industries were up vs 2019 by 7%, 13%, and 6%, respectively.
Unsurprisingly, Hotels was the most affected sector, with volume declines of 66% versus 2019. Retail investment faired better, but was down 6% vs 2019, as the pandemic added to the pressures and ongoing structural changes of that industry’s shift to an online-first platform.