Europe Commercial Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe Commercial Real Estate Market is segmented by Type (Offices, Retail, Industrial, Logistics, Multi-family, and Hospitality) and Country (United Kingdom, Germany, France, Russia, and Rest of Europe). The report offers the market size and forecasts in value (USD billion) for all the above segments.

Market Snapshot

Europe Commercial Real Estate Market  Growth
Study Period: 2018-2027
Base Year: 2021
CAGR: >5.5 %

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Market Overview

The European commercial real estate market is expected to register a CAGR of more than 5.5% during the forecast period.

The COVID-19 pandemic had a huge impact on the European commercial real estate sector. Although the crisis impacted the European economy and further affected investment sentiment among investors and occupiers, now the sector is in a recovery phase but has not reached the pre-pandemic levels.

According to the European Public Real Estate Association, the European Union’s commercial real estate sector contributed a combined GDP of more than USD 15.3 trillion in 2021. In addition, the sector had 177 REITs, with a combined market cap of USD 133 billion, and 261 Non-REITs, with a combined market cap of USD 308 billion.

Furthermore, Germany is still leading the commercial real estate sector despite the declined growth rate in the market. The declined growth rate in Q4 2021 was 8% compared to the same quarter in 2020 but experienced a growth of 14% compared to pre-pandemic levels. In addition, the United Kingdom is the next leading country in the market, with an annual growth rate of more than 25% in Q4 2021 compared to the same quarter in 2020. Moreover, countries like Sweden, the United Kingdom, Belgium, and Norway saw the highest growth in the sector. Meanwhile, France, Spain, and the Netherlands experienced a slow phase of recovery due to their declined retail sectors.

Scope of the Report

Commercial real estate (CRE) refers to property for business-related purposes or to provide a workspace rather than a living space. The report on the European commercial real estate market includes market dynamics, technological trends, insights, and government initiatives related to the market. Also, the report covers segmentation by type (offices, retail, industrial, logistics, multi-family, and hospitality) and country (United Kingdom, Germany, France, Russia, and Rest of Europe). The report offers the market size and forecasts in value (USD billion) for all the above segments.

Type
Offices
Retail
Industrial
Logistics
Multi-family
Hospitality
Country
United Kingdom
Germany
France
Russia
Rest of Europe

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Key Market Trends

Increasing Investments in the Commercial Real Estate Sector

The COVID-19 pandemic severely impacted the sector, and now, the market is in a recovery phase, as increasing investments are flowing into the sector. The commercial real estate sector had a strong rebound in investments in Q2 2021, with a growth rate of more than 70% compared to the same quarter in 2020. Furthermore, the investment flow continued in Q3 and Q4, with growth rates of 25% and 22%, respectively.

In addition, overall investments in 2021 accounted for more than EUR 270 billion, with an increased growth rate of 14% compared to 2020. This represents a strong recovery of the sector after the crisis, and this investment trend is widely shared among European countries.

Germany and the United Kingdom experienced the highest investments in the commercial real estate sector. Due to the vaccination roll-outs and pandemic relaxations, most developers are resuming their work. This factor boosted investments in the United Kingdom, as the country witnessed a growth rate of 20% compared to 2020, followed by Germany with a 7% growth rate in investments. The French and Dutch markets experienced decline rates in terms of investments.

However, foreign investments in the market were impacted by the pandemic earlier, but they have recovered now. In 2021, Americans showed strong interest in the sector among foreign investors and brought their investments back to pre-crisis levels, with more than EUR 41 billion investments in the sector.

Country Wise Investments into Commercial Real Estate Sector

The Logistics Market is Witnessing Lucrative Growth

Despite the pandemic disruption, the European logistics real estate market is resilient. E-commerce remains the main driver of the logistics market in Europe. Furthermore, strong changes in consumer behavior triggered by the pandemic crisis created the demand for online shopping and helped in the penetration of e-commerce in the market.

In addition, the sector experienced growth in investments, with more than EUR 25 billion invested during H1 2021. The market set a record and a strong growth rate of 62% compared to 2020. Meanwhile, the demand in the logistics real estate sector is surpassing the supply provided in the country. The supply in the market is extremely tight due to a severe shortage of development sites and strict regulations. This further resulted in the rental growth of warehouses. In H1 2021, the rental growth accounted for more than 3.2% compared to H1 2020.

Moreover, the United Kingdom and Germany are emerging as hotspots for logistics warehouses' space absorption. In H1 2021, Germany experienced record absorption of warehouse spaces, with more than 3.1 million square meters, followed by the United States with 2.6 million square meters, with a growth rate of 16% compared to 2020.

Country Wise Take-Up of Warehouses Space

Competitive Landscape

The European commercial real estate market is highly competitive and fragmented, with many players. Most of the players are expanding their businesses by investing strategically in partnerships, acquisitions, etc. The office sector, industry sector, and logistics sector are the most invested segments in the market. Furthermore, the investments in the market are driven by robust office space take-up and a rise in demand for logistic warehouses despite the disruption caused by the pandemic. Some of the major players in the market include Servo, Covivo, Hines, Blackstone Inc., STRABAG Group, etc.

Major Players

  1. SEGRO

  2. Covivio

  3. Blackstone Inc.

  4. Hines

  5. STRABAG Group

market concentration.PNG

Recent Developments

February 2022: Blackstone Inc. (a leading global investment company) recapitalized its European last-mile logistics company. Blackstone Inc., an existing investor in Mileway (a company that owns urban warehouses), agreed to a deal that values the business at USD 24 billion.

December 2021: Blackstone Inc. (a leading global investment company) acquired the European logistics portfolio from Australia’s Macquarie Capital Principal Finance and Singapore-based Elite Partners Capital for USD 586 million. This deal includes the collection of 12 logistics and industrial assets on behalf of its Blackstone European Property Income Fund.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

    4. 4.4 Supply Chain/Value Chain Analysis

    5. 4.5 Insights into Existing and Upcoming Projects

    6. 4.6 Insights into Rental Yields in the Commercial Real Estate Segment

    7. 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)

    9. 4.9 Impact of COVID-19 on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Market Drivers

    2. 5.2 Market Restraints

    3. 5.3 Market Opportunities

    4. 5.4 Porter's Five Forces Analysis

  6. 6. MARKET SEGMENTATION

    1. 6.1 Type

      1. 6.1.1 Offices

      2. 6.1.2 Retail

      3. 6.1.3 Industrial

      4. 6.1.4 Logistics

      5. 6.1.5 Multi-family

      6. 6.1.6 Hospitality

    2. 6.2 Country

      1. 6.2.1 United Kingdom

      2. 6.2.2 Germany

      3. 6.2.3 France

      4. 6.2.4 Russia

      5. 6.2.5 Rest of Europe

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Overview (Market Concentration and Major Players)

    2. 7.2 Company Profiles

      1. 7.2.1 SEGRO

      2. 7.2.2 Covivio

      3. 7.2.3 Blackstone Inc.

      4. 7.2.4 Hines

      5. 7.2.5 STRABAG Group

      6. 7.2.6 Tishman Speyer

      7. 7.2.7 HB Reavis Group

      8. 7.2.8 AG Real Estate

      9. 7.2.9 Futureal Management Szolgaltato Kft.

      10. 7.2.10 BNP Paribas

      11. 7.2.11 Skanska

      12. 7.2.12 OVG Real Estate*

    3. *List Not Exhaustive
  8. 8. MARKET OPPORTUNITIES AND FUTURE TRENDS

  9. 9. APPENDIX

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Frequently Asked Questions

The Europe Commercial Real Estate Market market is studied from 2018 - 2027.

The Europe Commercial Real Estate Market is growing at a CAGR of >5.5% over the next 5 years.

SEGRO, Covivio, Blackstone Inc., Hines, STRABAG Group are the major companies operating in Europe Commercial Real Estate Market.

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