Domestic Institutions See Sharp Decline in European Commercial Real Estate Investment Due to COVID-19 Impact

[Asia Economy Reporter Ryu Taemin] It has been revealed that domestic institutional investors' investments in European commercial real estate have sharply declined over the past two years due to the spread of COVID-19.

According to global real estate consulting firm Cushman & Wakefield on the 4th, last year, Korean institutional investors' investment in European (including the United Kingdom) commercial real estate amounted to 2.1749 trillion KRW (excluding indirect fund investments). This is about half of the 2020 figure (4.0176 trillion KRW) and only one-eighth of the record high in 2019 (17.1086 trillion KRW) before the full-scale spread of COVID-19.

Between 2019 and 2021, office investments accounted for the largest portion of domestic institutional investors' direct investments in the European commercial real estate market, making up about 63% of the total. Logistics warehouse investments ranked second at 26%. This appears to be due to the explosive growth of e-commerce following COVID-19, which increased leasing demand and investments.

Other investments, including mixed-use facilities, hotels, and land, accounted for 11%. It was found that domestic institutional investors have not yet made direct investments in the rapidly growing residential sector in the European commercial real estate market.

Meanwhile, there are also forecasts for a recovery phase. Kim Jonghan, Executive Director of Cushman & Wakefield's Europe Capital Markets Division, stated, "Over the past two years, overseas commercial real estate investments by domestic institutional investors, which had been contracted due to the impact of COVID-19, have gradually shown signs of recovery since the second half of last year," and added, "If the COVID-19 situation improves this year, European real estate investments are expected to rebound."

This content was produced with the assistance of AI translation services.