Investment into European real estate reached €152 billion in the first half of 2022 – the strongest ever first half of a year, according to preliminary data from CBRE.
The record first half was driven by a very strong Q1, where total investment volumes reached €84 billion. This was the second strongest Q1 behind the record-breaking Q1 of 2020.
Q2 volumes declined 11% to €68 billion, as increased borrowing costs and economic uncertainty slowed investment activity. Real estate pricing has been impacted by high inflation across the globe. Rate increases by central banks have also helped keep prices on a very high level. The European Central Bank (ECB) is expected to increase interest rates for the first time since 2011 next week.
Nevertheless, Ireland (+47%) and Belgium (+134%) posted a record Q2 volume. Investment volume in Ireland was driven by the Hibernia REIT portfolio consisting of office, residential and industrial. Italy (+53%), the Netherlands (+37%), Spain (+44%), and France (+24%) also posted higher volumes during the quarter.
For the 12 months ended 2022 Q2, the investment volume totaled €377 billion. Most European countries showed volume growth over this period.
Across sectors, European office activity increased by 19% over the first six months of 2022. Industrial & Logistics was up by 15% over the same period and Residential volumes were down by 10%. European retail volumes were up by 54%, driven largely by a major portfolio sale in Spain.
“The first half of 2022 brought €560 million of investments to the Hungarian market, which is equal to the first half of last year. The second quarter was the stronger this year, but only for technical reasons because a large portfolio transaction was closed at this time. Unfortunately, the war and shrinking credit facilities make a negative impact: contrary to our expectations in January, this year’s turnover is not expected to exceed last year’s value. At the same time, the investment palette has become more colorful, the share of offices has decreased significantly from 85 percent last year, while the share of logistics investments reached 25 percent,” explained Gábor Borbély, research director of CBRE.