Savills Investment Management (“Savills IM”), the international real estate investment manager, transacted EUR 4.91 billion in 2016, including sales and new purchases of EUR 2.46 billion each and exceeding the 2015 total of EUR 3.39 billion.
Total activity in Europe totalled EUR 3.98 billion, with EUR 819 million being transacted in Asia. The most active markets for Savills IM were the UK and Germany with transactions totalling approximately EUR 1.17 billion each.
There were 114 Individual and portfolio transactions across 18 countries, including the sale of a portfolio of 17 German office properties with a lettable area of 256,000 sq m to WealthCap for EUR 632 million. Savills IM also sold the property portfolio of its German Retail Fund for EUR 320 million to Patrizia Immobilien AG. The portfolio consisted of 25 well-let retail properties with a total lettable area of 183,000sq/m located in prestigious areas of Bavaria, Baden-Württemberg and Hamburg. Transactions in Asia included an office building at 77 Robinson Road in Singapore’s Central Business District for EUR 329 million.
A key initiative in 2016 was the launch of the innovative Mercury Fund, which enabled the Italian retailer CONAD to sell and lease back retail properties worth a combined EUR 300 million across central and northern Italy.
Savills IM currently has EUR 1.17 billion available to invest in new assets in Europe and Asia in 2017.
Kiran Patel, Chief Investment Officer at Savills IM, commented:
“European real estate markets continued to perform strongly towards the end of 2016, experiencing both improving fundamentals and further yield compression. It was a good time to bank profits and be mindful of a cycle that maybe about to turn. The UK referendum on EU membership, rising political and long-term economic outlook uncertainty has altered the perspective on some European real estate markets. With a cycle now 3-4 years into positive territory where rents have grown upwards, capital is having to be highly selective if it is to meet its future underwriting requirements.
“Investors should focus on longer term trends such as demographics, urbanisation and technology and their continued impact on occupier demand for new micro locations and real estate segments. Lower yields may tempt some investors to move further up the risk curve and outside their defined fund style. But we strongly advise investors to consider the intrinsic value of an asset rather than chase yields. For long term holders, these assets are expected to benefit from continued demand and should see sustained income returns, albeit at a lower level than previous years.”
Citigate Dewe Rogerson
Patrick Evans / Stephen Sheppard / James Madsen / Alice Stewart
Tel: +44 (0)20 7282 2966
Savills Investment Management