Niche European property markets thriving
European real estate fund managers are making strong gains on specific property markets despite uncertainty in commercial property triggered by weak growth forecasts in the eurozone. Logistics properties and the Belgian office market are two areas that are prospering.
GLL Real Estate has made one of the largest French logistics property deals of 2011. The Munich-based real estate fund management group completed a share deal acquisition from Paris-based real estate investment manager AEW Europe for €177m.
The deal means GLL Real Estate will take on one of AEW’s real estate portfolios comprising eight logistics warehouses with a total surface area of approximately 280,000 sqm. GLL Real Estate Partners, founded in 2000, has funds under management over €4bn. Its main investors include pension funds, insurance companies and sovereign entities.
Meanwhile Helios Europe, the specialist logistics developer, has secured €100m of funding for its development pipeline from Tristan Capital Partners, the London-based private equity real estate company.
The funding partnership agreement between Helios Europe and the Curzon Capital Partners III fund, a €500m vehicle, will invest in European pre-let deals in Benelux, Germany, Austria and Sweden as it seeks opportunities within economies experiencing growth in demand for buildings in the logistics sector.
Savills, the real estate services provider, has also recently reported that the Brussels office market in particular is booming. Savills’ report predicted that Brussels will see €2bn of transactions in 2011, while €943m has already been transacted in the first half of the year. The first half figure represents a 96% increase on total investment in 2010.
The report said domestic investors accounted for 60% of acquisitions with 30% German and 11% French. It also showed that investors have been hesitant this summer with only one deal during the second quarter transacted above €50m (Espace Orban Complex sold for €80 million reflecting a net initial yield of 6.35%). Savills also predicted that global market volatility will see long term yields hold at 5-5.25% with no further compression anticipated in the short term.
Sheelam Chadha (pictured), head of Savills research in Brussels, said the upturn in the investment market in the first quarter has persisted in second but at a more moderate level. “With lettings market figures below average and investor hesitation over the global economy, we do not expect the second half of the year to significantly exceed the first half in terms of total investment volumes,” Chadha commented.