A total of €62.6 billion was pumped into commercial property in the cities, including London, Paris and Berlin, according to data from BNP Paribas Real Estate.
The growth in Madrid, where commercial property investments totaled €1.848 billion, is a bit deceiving. The 126 per cent comes from a low base of only €819 million the year earlier. In comparison, London attracted €27 billion, growing by 46 per cent in the year. Paris attracted €12.5 billion of non-residential investment, a 25 per cent increase.
The Madrid office market was the only one of the cities included in the research that registered a decline in prime yields in the second quarter. Declining yields were driven by rising prices, due to the flood of foreign investors and funds looking for deals in Spain.
“Increasing commercial property investment in the Spanish capital is a sign that investors are recovering their appetite for Spanish real estate, though this recovery in sentiment is still fragile and could be derailed by any number of macro shocks,” said Mark Stucklin of SPI.
Investors in non-residential real estate investment in European cities are still focused on “core” assets with the greatest liquidity, though the share of more speculative investments is growing, BNP Paribas reports. But growing investment levels and the search for yield are driving investors towards riskier assets.