More than a third (36%) of the European real estate professionals recently surveyed by Drooms are planning to increase their cross-border real estate investments.
This is one of the key trends found by our new “Real Estate Transaction Barometer 2022” survey. We at Drooms, the leading provider of digital data rooms for real estate assets in Europe, have recently evaluated more than 4,000 transactions completed between 2019 and 2022 in addition to surveying around 170 real estate professionals in Europe.
In this article, you will learn:
- How real estate professionals in the UK, Germany, France, and Spain are planning to invest
- Which asset classes are appealing to them right now
- Which real estate investment locations are of primary interest
Overall, our study reveals that the real estate market players in Europe are planning to conduct investments beyond the borders of their domestic markets. However, the survey also shows that international strategies are different from country to country.
Open minds in the UK and France
Investors based in the United Kingdom have identified opportunities to grow their international investments – in fact, 91% are planning to either increase their international property business overall or keep international investments on a par with the level recorded in the previous year. In total, 73% of respondents from the UK intend to invest at least 25% of their capital on an international basis.
French real estate professionals are also eyeing up foreign markets, with the majority (64%) planning to invest more internationally. Moreover, 43% of French respondents also stated that they intend to invest at least a quarter of their capital in foreign real estate assets. In contrast, just 7% said that they are planning to scale back their foreign investments.
Greater indecision in Spain
While real estate professionals in the UK and France would fundamentally appear to be more open to cross-border real estate transactions, those in Spain seem to be undecided. In total, 42% are keen to become more active internationally, while 46% plan to invest a similar sum in international markets compared to last year. A total of 42% of Spanish respondents also stated that they have earmarked a capital share of more than 25% for international projects.
Germans are more cautious
Here in Germany, a certain degree of scepticism has set in. In total, 20% of German respondents are planning to reduce their investments in international real estate markets. Although 23% stated their intention to increase international investments, only just under a third (31%) revealed that they are planning to invest more than 25% of capital in international real estate markets. In total, 58% of German real estate professionals will seek to maintain international investments at a similar volume to the previous year.
What is the explanation for these differing approaches?
“In principle, international real estate assets are popular among investors, even though the macroeconomic environment is challenging at present. The fact that an above-average number of German investors are planning to curb their international activities could potentially also be explained by a strong domestic market,” comments Alexandre Grellier, CEO, and co-founder of Drooms.
European markets driven by foreign investors to a significant extent
Another key finding from the survey: the relevant European real estate markets continue to be highly international in nature and heavily driven by foreign investors. According to the survey respondents, German (51%), US (26%) and UK (23%) investors are the most important drivers of the European real estate market.
Which asset classes on the real estate market appeal to investors the most?
As before, respondents confirmed the popularity of the logistics (34%) and residential (27%) asset classes. The reasons for this include secure cash flows and the manageable risk situation. Despite the continuing debate surrounding employees working from home, there remains a focus on office properties as well (16%).
In Germany, logistics (36%), residential (23%) and office real estate (20%) are all extremely popular. It is worth noting that, at around 8%, healthcare facilities are more popular with real estate investors in Germany than in any other country.
In the United Kingdom, at 27%, hotels and gastronomy are the second most popular asset class after logistics (45%). In France, logistics is also the most popular asset class at 38%, with office space slotting into second place at 31%. In Spain, respondents viewed residential real estate as the most promising asset class. At 42%, it left logistics (29%) trailing in its wake.
Which investment locations are the most attractive in Europe?
Answers to the question regarding the most interesting markets, revealed that the German-speaking DACH region is particularly attractive to real estate professionals: 52% of respondents identified Germany, Austria, and Switzerland as the most promising European locations for real estate investments. However, the UK (26%) and countries that make up the region of Central and Eastern Europe (CEE; 21%) are also interesting.