Capital Flows Quarterly Report

Second Wave of Asian Investors and Canadian Capital in Continental Push

Colliers’ Capital Flows Quarterly Also Shows Revival of Spanish Investment Market with Wider Focus on Retail and Development Opportunities

Capital Flows Quarterly ReportLONDON, July 21, 2014 – Cross border investment in Europe rose by nearly a third (32 per cent) year on year in the first half of 2014 to top €44 billion, representing approximately 57 per cent of total European investment turnover. Approximately 53 per cent of cross border capital came from outside of Europe.

While Asian investors continue to dominate Central London, now paying sub-5% yields, Colliers’ Capital Flows Quarterly also highlights that a better economic outlook, and understanding of the market, are pushing new and more established sources of Asian capital up the risk curve.

Curtis Scott, National Market Intelligence at Colliers International in Canada, said: “More established Asian buyers are increasingly prepared to venture outside Central London, looking at other asset classes such as shopping centres with asset management potential in the UK, and stable office income investments in other tier 1 cities”. 

“In particular, we are seeing some investors – led by South Korean, Chinese and Taiwanese insurance companies – bidding for assets in Paris and main German cities, but increasingly in Madrid and Rome as well. This was recently highlighted by GIC (Singapore) taking full control of Roma Est shopping centre in Rome and Dalian Wanda buying a historic skyscraper, Edificio Espana, for redevelopment in Madrid”.

Canadian investors are also increasingly active in continental Europe, together with Australian funds and Sovereign Wealth Funds (SWFs) like NBIM and Kuwait Investment Authority also eyeing European expansion.

There has also been growing foreign interest in Dutch residential, while German investors cement their presence in Amsterdam CBD. Transaction volumes in the Netherlands reached nearly €4 billion in H1 alone (+70 per yoy), of which €2.4 billion was cross-border capital.

Scott continued, “Spain has also seen a pleasing revival in transactions as investors widen their focus to retail and development opportunities. Cross border investment in Spain reached €2.3 billion in H1 2014, up from €780 million a year ago.”

The report also highlights a flurry of deals underscoring investors’ appetite for alternative product, most notably hotels and serviced apartments, proving that hotels are gaining further ground as an asset class. Apollo Global Management’s (U.S.) acquisition of a portfolio of 18 hotels across Germany, Spain and France, valued at € 425 million, is believed to be its first hotel investment in Europe, whereas QIA (Qatar) recently added five more properties to its hotel portfolio, located in Cannes, Madrid, Frankfurt, Amsterdam and Rome.

Global Cross Border Flows

Download the full report.

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