emea investor intentions survey 2021 © cbre, inc
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EMEA INVESTOR INTENT IONS SURVEY 2021 © CBRE , INC. | 2
EXECUTIVE SUMMARY
SURVEY METHODOLOGY
• CBRE’s 2021 EMEA Investor Intentions Survey was conducted from December 2020 to January 2021. Over 400 Europe-based investors participated in the survey, which asked respondents a range of questions regarding their buying appetite and preferred strategies for sectors and markets in 2021.
EXECUTIVE SUMMARY
• Investors generally hold upbeat views towards prospects for 2021, with almost 60% of respondents expecting to increase their purchasing activity this year, while over two-thirds expect selling activity to be equal to or greater than it was in 2020. Due in part to this optimism, CBRE’s predicts European investment volumes will increase by up to 5% y-o-y this year
• Germany was the subject of strong interest in this year’s survey, with investors expecting this market to be the first to see investment volume recover to pre-pandemic levels. Four German cities were ranked in the top 10 investment destinations selected by investors.
• Given the uncertainty around the pandemic and its impact on economic and real estate fundamentals, investors showed a preference for core strategies. A search for yield is also driving interest in value-add opportunities and alternative real estate assets.
• Despite the implementation of flexible work patterns, offices remain the most preferred asset class, with logistics and multifamily also gaining popularity this year. Not surprisingly, these are the sectors where pricing is expected to remain strongest. Most investors generally expect sizable discounts for certain types of retail and hotels.
• Other key findings from this year’s survey included a stronger focus on rent growth, growing interest in long-term demographic and technological trends and the wider adoption of Environmental, Social and Governance (ESG) principles and practices.
OTHER KEY FINDINGS
• Investors remain cautious and favor core and core-plus developments.
• Office remains the most preferred property type for investment with elevated interest in logistics and multifamily properties.
Strategies and Sectors
• Germany, The Netherlands, and France are expected to stage the fastest recoveries among major markets.
• London is the most preferred city for investment, with Berlin close behind.
Preferred Markets
• Pricing stable for Logistics and Class A Offices while nearly all investors looking for moderate to deep discounts in retail and hotel assets
• Owners are looking to emphasize tenant credit and ESG strategies.
Other Key Findings
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 3
RESPONDENT PROFILETOTAL RESPONSES = 415
Figure 1:
PERCENTAGE OF RESPONDENTS BY MARKET
Figure 2:
INVESTOR TYPE
Germany
36%
UK
12%France
11%
Nordics***
9%
CEE**
7%
Pension fund
5%
Real estate fund
39%
Developer/ Owner
/ Operator
28%
Insurance company
5%
Other
16%
Netherlands
9%
Other*
16%
High net worth individual / Private individual investor/ Family office
7%
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021*Other includes respondents from Austria, Belgium, Ireland, Luxembourg, Portugal, Spain, and Switzerland**CEE includes respondents from Czech Republic, Hungary, Poland and Romania***Nordics includes respondents from Denmark, Finland, Norway,, and Sweden
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 5
ALMOST 60% OF INVESTORS EXPECT TO BUY MORE IN 2021 AS UK RESPONDENTS SHOW PARTICULARLY HIGH OPTIMISM
Figure 3:
INVESTMENT ACTIV ITY EXPECTATIONS
0%
10%
20%
30%
40%
50%
60%
70%
80%
Buy More About the same Buy Less
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 6
OVER TWO-THIRDS OF INVESTORS EXPECT 2021 SELLING ACTIVITY TO BE EQUAL TO, OR GREATER THAN IT WAS IN 2020
Figure 4:
SELL ING ACTIV ITY EXPECTATIONS
0%
10%
20%
30%
40%
50%
60%
Sell More About the same Sell Less No Intention to Sell
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 7© CBRE , INC. | 7
PACE OF THE REBOUND DEPENDS ON CONTAINMENT OF PANDEMIC
Source: The New York Times, 9 March 2021
PHASE 1
Vaccines testing safely and dosage
PHASE 2
Vaccines in expanded safety trials
PHASE 3
Vaccines in large-scale efficacy tests
LIMITED
Vaccines in early or limited use
APPROVED
Vaccines approved for full use
ABANDONED
Vaccines Abandoned after trial
43 27 21 6 6 4
POTENTIAL SCENARIOS IN 2021
WORST CASE BASE CASE
• Further wave of infections in winter delays peak of the pandemic to H2 2021
• Delays to or inefficiency of mass vaccinations persists into H2 2021
• Expiry or lack of impact of economic stimulus measures.
• Growth in new infections peaks before end-Q1 2021
• Vaccines become widely available by H2 2021
• Governments extend stimulus measures
VACCINE DEVELOPMENT
Source: CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 8
TRANSACTION VOLUME EMEA 2007-2021
Figure 5:
EMEA INVESTMENT VOLUME (EUR MILL ION)
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F
Q1 Q2 Q3 Q4 Forecast
Source: CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 9EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 9
RECOVERY BY COUNTRY AND MOST ATTRACTIVE CITY IN 2021*
Figure 6:
COUNTRY-LEVEL RECOVERY EXPECTATIONS AND MOST PREFERRED CITY (CROSS-BORDER* ONLY)
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
*Includes respondents domiciled in a different county than location selected
LEGEND
Top ten recovery expectation ranking cou
1 GERMANY
2 NETHERLANDS
3 FRANCE
4 SWEDEN
5 UK
6 NORWAY
7 SWITZERLAND
8 DENMARK
9 AUSTR IA
10 F INLAND
1 LONDON
2 BERL IN
3 FRANKFURT AM MAIN
4 PAR IS
5 AMSTERDAM
6 MUNICH
7 HAMBURG
8 ZUR ICH
9 WARSAW
10 L ISBON
Top ten preferred cities
5
3
2
46
7
8
9
10
12
31
4
5
6
7
10
9
8
KEY OBSERVAT ION:
Germany came away as the clear winner of the Investor Intention Survey’s recovery expectations and most attractive city rankings
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 11
ESG CRITERIA IS ALREADY WIDELY ADOPTED AMONG EUROPEAN REAL ESTATE INVESTMENT FIRMS
Figure 7:
ESG AND INVESTING
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
We are considering adopting ESG criteria We are unlikely to adopt ESG criteria We have already adopted ESG criteria We will adopt ESG criteria within the next three to fiveyears
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 12
Core
Value-add
Core plus
Opportunistic
NPL and Distressed Assets
0% 5% 10% 15% 20% 25% 30% 35%
INVESTORS ADOPTING RISK-AVERSE STRATEGIES AS ECONOMIC RECOVERY BEGINS
Figure 8:
PREFERRED STRATEGY – ALL
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 13© CBRE , INC. | 13
DESPITE IMPACT OF FLEXIBLE WORK STRATEGIES OFFICE CONTINUES TO DOMINATE WHILE MULTIFAMILY CATCHES UPFigure 9:
SECTOR PREFERENCE
Multifamily
24%
Other (Please Specify)
8%
Retail
7%
Office
35%
Hotel
3%
Industrial and logistics
22%
PERCENTAGE OF OVERALL MENT IONS BY THOSE WHO SELECTED OTHER AND SPECIF IED :
0% 10% 20% 30% 40% 50%
Other
Healthcare
Alternative Residential
KEY OBSERVAT ION:
Multifamily’s overall percentage may actually be closer to 30% given discrepancies in naming
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 14
VIEWS DIVERGE AMONG MAJOR MARKETS WITH CONTINENTAL EUROPE STILL FAVORING OFFICE
Figure 10:
FAVORITE SECTOR BY MAJOR MARKET
0%
10%
20%
30%
40%
50%
60%
Hotels / Resorts Industrial and logistics Multifamily Office Other, please specify Retail
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 15
PRICING REMAINS STRONG FOR INDUSTRIAL AND CLASS A OFFICE
Figure 11:
PRICE DISCOUNTS EXPECTED BY SECTOR
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Shopping Mall
Hotel
High street retail
Class A office (Value-add)
Class A office (Stabilized)
Logistics
Discount of 30% + Discount of 10%-30% Discount of less than 10% No discount Willing to bid above asking price
Percentage of investors looking for discounts
7%
39%
86%
95%
99%
99%
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 16
OCCUPIERS ARE SET TO REVIEW THEIR REAL ESTATE PORTFOLIO STRATEGY BUT INVESTORS REMAIN POSITIVE
Figure 12:
OFFICE SPACE EXPECTATIONS
How do you expect your corporation’s real estate portfolio to change over the next three to five years?
Figure 13:
OFFICE DEMAND EXPECTATIONS
What is investor view of demand for physical office space in the coming three years?
15%
50%
24%
3%
6%
1%
0% 10% 20% 30% 40% 50% 60%
Decrease significantly (10% to 30%)
Decrease slightly (up to 10%)
Remain the same
Unsure
Increase slightly (up to 10%)
Increase significantly (up to 30%)
50%
38%
12%
0% 10% 20% 30% 40% 50% 60%
Significant decrease in officesquare footage
Modest decrease in office squarefootage
No change
Source: Future of the Office Survey : CBRE Research, September 2020 Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 17
STUDENT AND SENIOR HOUSING REMAIN TOP CHOICE AMONG ALTERNATIVES
Figure 14:
ALTERNATIVE INVESTMENT PREFERENCE
0%
5%
10%
15%
20%
25%
Student living Retirement living / Senior housing Data centre Healthcare related assets (including lifesciences and medical offices)
Real estate debt
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 18
EUROPEAN INVESTORS SHOW LIMITED APPETITE FOR INVESTMENT IN OTHERREGIONS
Figure 15:
INTER-REGIONAL INVESTMENT INTENTIONS*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No plans for cross-border investment* North America Developed Asia
Germany UK France Netherlands Nordics CEE Total
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
*Cross-border investment refers to capital flows destined to regions outside of Europe
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 19
TENANT CREDIT AND LONG-TERM STRUCTURAL CHANGES ARE MAJOR FACTORS IN PORTFOLIO CONSTRUCTION GOING FORWARD
Figure 16:
TOP IMPACTS ON OPERATING STRATEGY
0% 5% 10% 15% 20% 25%
Greater emphasis on tenant credit and rent roll growth
Stronger focus on long-term demographic and technological trends
Greater consideration of ESG issues
More interest in assets with redevelopment potential
Introduction of Flexible Space in Office Assets
Source: EMEA Investor Intentions Survey, CBRE Research, January 2021
EMEA INVESTOR INTENT IO N S SURVEY 2021 © CBRE , INC. | 21
CBRE RESEARCH
This report was prepared by the CBRE Global Investor Research Team, which forms part of CBRE Research—a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate.
All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its
accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only
exclusively for CBRE clients and professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be
altered in any way, transmitted to, copied or distributed to any other party without prior express written permission of CBRE. Any unauthorized publication or redistribution of CBRE research reports is prohibited. CBRE will not be liable for any loss, damage, cost or expense incurred or arising by reason
of any person using or relying on information in this publication.
To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at reports www.cbre.com/research-and-reports
© 2021 CBRE, Inc
I N V E S T O R I N T E N T I O N S S U R V E Y 2 0 2 1
FOR MORE INFORMATION ABOUT THIS REGIONAL REPORT PLEASE CONTACT:
Henry Chin, Ph.D.
Head of Research, Asia Pacific &Global Head of Investor Thought Leadership
henry.chin@cbre.com.hk
Benjamin Pipernos
Research AnalystGlobal Investor Thought Leadership – Capital Markets
benjamin.pipernos@cbre.fr
Darin Mellott
Director of ResearchGlobal Investor Thought Leadership
darin.mellot@cbre.com
Chris Brett
Head of Capital Markets EMEA
chris.brett@cbre.com
Jos Tromp
Head of Research Continental Europe &Head of Data Strategy and Thought Leadership EMEA
jos.tromp@cbre.com
Richard Barkham, Ph.D.
Global Head of Research &Global Chief Economist
richard.barkham@cbre.com
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