In Belgium the investment volume reached a record high (€5.3bn +46% y-o-y), in Luxembourg, it nearly doubled compared to 2017 (€2.4bn +97% y-o-y), whereas, in the Netherlands, the annual figure (€11.4bn) was 25% down compared to 2017’s high.
In relation to wider Europe, Benelux, which represents an area less than 2% of the 18 European countries monitored by the report, accounted for 7.8% of the European investment volume in 2018. This is notably due to large transactions including HighBrook’s purchase of Mesdag Delta Portfolio in the Netherlands for €615m and Ethias/Intégrale’s acquisition of Deloitte’s HQ in Luxembourg for €250m.
Lydia Brissy, European Research Director, Savills, adds: “Although 50% of investment into Benelux was focused on the office sector, the exponential expansion of e-commerce in the region means that there is growing appetite for logistics assets – particularly in the Netherlands and Belgium given their strategic location within Europe. We also expect to see a growing share of alternative investments, notably multifamily, student and senior living.”
With regards to capital origin, many of the deals from 2018 and those anticipated in 2019 are part of heightened interest from investors outside of Europe. Although the US takes first prize for share of investment volumes (30%), Korean (Korea Investment Holdings/KTB Investment & Securities), Canadian (Dream Global REIT/AIMCo) and Israeli (Forma Fund) funds entered into Benelux taking a total share of 11%. They were also joined by Singapore-based investor, Mapletree Investments who acquired a European logistics portfolio at the end of 2018.
With regards to yields, strong investor appetite on yields has pushed yields down further. The average prime office CBD yield in the region currently stands at 3.55% compared to 3.3% in Core countries. Over the course of the past five years, the spread between the two regions fell from 68.5bps to 25bps last year. Yet prime office yields in the Benelux remains attractive compared to other major European cities.
In summary, Savills anticipates another high volume of investment for this year of more than €17bn, driven by an increasing amount of capital targeting the region.