European Real Estate Snapshot

An archive of our monthly in-depth coverage of the developments in the European Real Estate market. Subscribe below for future updates.


December 2019

Focus of the Month

2019 in Review

2019 was an interesting year for European real estate as political and economic headwinds, along with a growing consensus around the late stage of the real estate cycle dictated caution in the choice of assets and geographies for investments. A snapshot of some key developments and trends across sectors in 2019:

  • Ireland is set to be the fastest growing economy in the EU for the sixth consecutive year. However, in the middle months of the year, the take-up was the weakest since 2012, owing to economic uncertainty, but the months before that recorded the strongest take-up since 2012.
  • The pre-let office market saw extremely high level of activity, due to a supply shortage. Nearly 50% of under construction property is already committed. In addition, developers are choosing a mixture of commercial space in large scale residential developments in order to keep them viable as well as to address the high demand in the occupier market. City rents remained stable though occupancy levels have dropped to 5%, which has also resulted in a tightened rent-free period.
  • In Madrid, the take-up at the end of the third quarter of 2019 was only 2% lesser than in 2018, with companies preferring the CBD and prime properties. Prime yields in Madrid are 3.75% and in Barcelona are around 4%, remaining stable and low.
  • 2019 was a good year for French retail investment, with total activity possibly crossing the €5 billion level, even with the backdrop of increased office demand and investors preferring to diversify across logistics and managed residential properties.
  • High streets which account for the largest DNVB shops are the top picks for investors and their share in terms of total retail investment volume has risen from 30% to 50% in the last 5 years. Shopping centres were back in the limelight after a sluggish 2018, and € 900 million (more than double of 2018) is expected to be invested here.
  • Investment volume in Spain till the end of Q3 had reached €945 million, with a high concentration in high street (22%). Shopping centres which have witnessed reducing operations have generated a 58% investment turnover.
  • Western Europe accounted for 67% of the total online sales in Europe with the share of online sales ranging from 3% in Italy to 18% in UK. E-commerce Europe estimates that the B2C sales grew by 12.7% or €602 billion during 2018 and forecasts the pace to sustain for the next few years. With the structural shift from retail to online sales, we will see a concurrent shift from retail to warehouse space.
  • While there continued to be a sustained demand for standard size warehouses in the range of 10,000-30,000 sqm, there is an increasing trend towards larger size warehouses. For example, many large warehouses, sized 50,000 sqm or more have come up in the Netherlands for eRetailers like Zalando, Action, Wehkamp etc.
  • Robotic automation in logistics remains around 10% in Europe but amidst a persisting labour shortage and increasing need for efficiency, robotic automation will pick up in the sector, which could require much bigger warehouses up to 200,000 sqm depending on the technology being used.
  • Europe is majorly dominated by homeownership, though rentals are picking up in Spain and the trend is spreading east. Rental yields are nearing 4% in Spain, which is higher than a fixed income investment as well as prime office and retail. Demand is high in Netherlands as well due to increase in employment opportunities especially among expats. However, new builds are becoming increasingly more expensive due to new regulations as well as rising costs and land prices.
  • House prices in prime central London remained flat for most part of the year, though supply constraints are leading to prices climbing in areas like Notting Hill and Knightsbridge. But the overall price decline, along with the fall in sterling has continued to attract foreign buyers who effectively have a 20% discount as compared to before the referendum. Help to Buy has kept demand for new buyers strong.
  • Housing prices are rising across Spain, more so in existing houses than in new builds (4.4% growth vs a 4.1% growth). Foreign buyers are showing an increasing interest in the Spanish residential market, contributing nearly 17% to the total transactions.

Key Themes for 2020

Low interest rate environment and prolonged real estate cycle
  • Amidst the constant flux of economic and political factors like low interest rates, negative bond yields in several European countries, a threat of global recession, Brexit and trade tensions between US and China, European real estate will continue to sustain investor interest.
  • Given the late stage of the cycle, more investors will explore debt investments in real estate which would increase the availability of senior financing to niche sectors, in addition to traditional assets. The broadening of availability of debt is likely to continue as debt funds and institutional lenders like pension funds and insurers continue to explore real estate debt investments.
  • Owing to structural changes in consumer demand and growth of online sales, the retail sector, especially in the UK, would remain under pressure as lenders take a cautious and selective approach amidst falling income and capital values.
Sectoral and geographical shifts
  • Logistics and affordable residential sectors will likely witness a sustained growth in investment and development, as changing consumer demands and supply constraints bolster activity in the sector.
  • Investors will also look for opportunities to acquire assets and repurpose them to in-demand income generating assets. There could be a conversion of underperforming retail assets to mixed residential and employment spaces, co-working, affordable housing or last-mile logistics etc.
  • Paris is set to hog the limelight with the upcoming 2024 Olympic Games and the Grand Paris project in the pipeline, which will add infrastructure and connect new areas in the city, driving increase investor activity in the market.
Digital Transformation
  • Technology will continue to transform all areas in real estate including asset and property management, building operations, capital raising, investment and portfolio management etc. as those who can act faster and make data driven decisions will emerge leaders.
  • Improved efficiencies and data-based decision making will be the key drivers for digitalisation in the near future before firms are able to implement enterprise wide strategies that can drive revenue generation and improve engagement.

Funds in the Market

Strategy Institution Regional Focus Asset Focus Status Fund Size (mn)
Value-add Greystar US Multifamily Closed $ 2,000
Value-add Angelo Gordon UK, Ireland, the Netherlands, Germany, France, Spain, Italy, Sweden, Denmark and Norway Sub-performing and distressed real estate assets Raising € 1,200
Debt ICG-Longbow UK Diverse Final close £ 928
Core Patrizia Pan-European Residential Raising € 1,000
Core plus DTZ Investors and The Collective Greater London Co-Living Raising £ 650
Opportunistic ActivumSG Germany, Spain and the UK Redevelopment projects, mezzanine loans, real estate operating companies Raising € 650

Recent Transactions

Snapshot of Key Deals
Asset Name Buyer Seller Asset Type Location Price (mn)
Stadthaus Building DIC Asset AG Mirae Asset Global Investments Office Germany € 500
Paris Office Buildings Allianz BNP Promotion and Emerige Office France € 416
Portfolio of UK Big Box Properties Morgan Stanley and Thor Equities Segro Warehouses London £ 241
Venice Mestre Hotel Deka MTK Property Hotel Italy € 200
2 Prime Logistics Property Consortium of South Korean Investors Gulf Islamic Investments & Rasmala Bank Logistics Germany € 140
Office Buildings Tikehau Capital and Singapore’s IREIT Global Blackstone Office Spain € 130
Asset Name Lender Borrower Asset Type Location Loan Amount (mn)
Portfolio of light industrial and warehouse assets CMBS bond investors Blackstone Industrial and Logistics Germany € 724
Residential units BNP Paribas, Natixis Powerhouse Habitat Residential France € 560
Maritim Hotel Deutsche Hypo, SSK Düsseldorf, KSK Düsseldorf, KSK Köln, SK KölnBonn, SK Gelsenkirchen, SK Hannover, SaarLB Commerz Real Hotel Germany € 162
Mixed-use portfolio Aviva Investors Romulus Mixed-use UK £ 136
Residential development RBC Real Estate Capital Partners Lone Star Residential Ireland € 120
Hotel portfolio Aareal Bank Angelo Gordon Europe, EQ Hotels Hotel France € 120

Key Indices

Key Indices 30-11-2019 YTD 1-YEAR 3-YEAR 5-YEAR
MSCI World Real Estate 229.46 18.8% 12.1% 23.0% 16.8%
STOXX Global 1800 Real Estate 286.63 19.2% 12.8% 24.5% 18.9%
STOXX Europe 600 Real Estate 187.84 19.6% 12.8% 17.5% 15.2%
Dow Jones US Real Estate 366.19 23.7% 13.4% 24.3% 22.1%
STOXX APAC 600 Real Estate 257.16 11.1% 9.8% 15.6% 10.4%
Property REITS - Europe 30-11-2019 YTD 1-YEAR 3-YEAR 5-YEAR
Retail 58.99 1.4% (7.4%) (28.2%) (45.5%)
Office & Industrial 136.27 35.9% 30.6% 41.2% 28.0%
Property REITS - US 30-11-2019 YTD 1-YEAR 3-YEAR 5-YEAR
Retail 354.09 (13.1%) (22.5%) (29.5%) (33.3%)
Office 345.88 19.2% 5.3% (0.9%) 1.2%
Healthcare 190.05 16.8% 8.6% 17.0% 1.8%
Industrial 479.2 48.3% 32.8% 70.7% 115.7%
Diversified 272.08 29.6% 19.6% 47.3% 46.3%


This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material is not financial research and was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Oxane Partners has no obligation to provide any updates.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. The information contained in this presentation is not intended to be used as a general guide to investing, or as a source of any specific investment recommendation.Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Oxane Partners to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.Sources: PERE, Real Estate Capital, Gulf News, South China Morning Post, Savills, Knight Frank, Deloitte, JLL, Institutional Real Estate, Bloomberg, propertyfundsworld, Cushman & Wakefield, Heitman, Urban Land Institute, Financial Times, SWFI