avills Investment Management (“Savills IM”), the international real estate investment manager, transacted EUR 5.5 billion in 2017, a record annual volume. This included EUR 2.95 billion of disposals and EUR 2.55 billion of acquisitions and compares to the EUR 5.0 billion transacted by the firm in 2016, which itself was a previous record.
The firm saw total activity of EUR 4.5 billion in Europe and EUR 1 billion in Asia. Markets in which Savills IM was particularly active included the UK, Italy and Japan, where volumes were EUR 1.73 billion, EUR 919 million and EUR 845 million respectively.
There were 147 individual and portfolio transactions across 17 countries coinciding with Savills IM local platform of 18 real estate offices.
Some of the highlights in activity included the purchasing of over EUR 600m of London offices, the purchase of a portfolio of retail warehouses from IKEA Centres in Sweden for EUR 130 million for the newly launched Nordic III fund and the purchase of four European assets on behalf of a strategic Asian partner for EUR 450 million.
The EUR 2.95 billion of sales represented a mixture of disposals from the German mutual funds, such as the sale of a EUR 480 million European office portfolio. There was also an element of profit taking in accordance with asset and fund business plan. Examples of which include the sale of a retail asset in Berlin out of the Europe II fund and a logistics asset in Berger, Norway as part of the Nordic Logistic Fund II as well as the EUR 365m sale of mixed-office developments in Italy and two sizeable office assets in Tokyo.
Savills IM had a bias towards logistics in 2017, purchasing over EUR 500 million of assets across Europe and over EUR 150 million of this was purchased in Poland on behalf of a strategic partner. The firm also successfully launched two funds and achieved eight new managed accounts.
Savills IM currently has significant investment power of over EUR 1 billion available to invest in new assets in Europe and Asia in 2018. The firm has an additional EUR 887 million in exclusivity heading into 2018.
Kiran Patel, Chief Investment Officer, Savills Investment Management, commented:
“European real estate markets performed strongly in 2017, experiencing positive rental growth and further yield compression. Market data suggests the UK regained its title as the biggest property investment market in Europe following the impact of Brexit, largely supported by Asian capital flows.
“Looking ahead, there are a number of risks emerging in Europe, including political tensions, a continued weight of money chasing the sector and the consequential impact of a tapering of Quantitative Easing. But we believe the attraction of secure and stable income returns associated with strong supply and demand fundamentals remain strong. Urban logistics, offices in certain major cities, retail parks and other selective retail formats, socio-infrastructure assets and alternatives are expected to outperform.”