EU demand shifts from traditional commercial assets to apartments, student housing

Demand shifts from traditional commercial assets to apartments, student housing

European real estate investment activity dipped in 2018 though still reached the fifth strongest annual level on record, the latest edition of Europe Capital Trends shows. While total investment volume finished the year down versus 2017, activity levels were still elevated, which is reflected in continued price growth in most markets covered by the RCA CPPI.

Broadly, growth in investment has shifted to smaller markets and the apartment sector and other accommodation asset classes. In the top 10 European markets, only Poland and Austria record growth in activity for the year in full.

Germany recorded its strongest quarter ever at the end of 2018, with investors remaining bullish despite the record low yields in most German markets and slowing economic growth. In contrast, the U.K. saw a substantial drop in the fourth quarter, as Brexit-uncertainty and the retail slowdown took their toll.

The apartment sector was the only property type which registered higher volume in 2018 than 2017. This comes as investors allocate more outside of the traditional commercial property types to asset classes like apartments, hotels, senior and student housing. Together, these garnered a record proportion of market activity in 2018.

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