South Korean investment into Europe increased by 122% year-on-year in 2019 to €12.5bn (from €5.6bn in 2018) according to the most recent data from Savills.
Preliminary figures from the international real estate advisor indicate that France is set to have been the biggest beneficiary of this increase in capital, boasting record volumes of investment; €4.5bn and 36% of the total (up from €355m in 2018). Germany comes in second place with 16%, €1.9bn of the total (compared to €1.3bn in 2018), followed by the UK with 13%, €1.6bn of the total (compared to €2.2bn in 2018).
Among the most active investors were Samsung Life Insurance, Hanwha Investment & Securities, Mirae Asset and Samsung Securities. The latter purchased the Lumière building in Paris as part of a joint venture with Primonial for a record €1.2bn. A consortium of Hana Financial Investment and NH Securities also forward funded the EDGE office redevelopment, Amsterdam, scheduled for 2021 completion, while Vestas Investment Management acquired an Amazon warehouse close to Barcelona airport for €200m.
In terms of asset classes, it was unsurprisingly the office sector which stood out attracting a total of 70% of investment (€8.7bn) with the industrial sector accounting for 25% (€3.1bn) of the total investment volume in 2019, following a massive €1.8bn of industrial transactions in the final quarter.
” ..we expect South Korean capital to be a powerful force in European real estate throughout the next 12 months – particularly in core and core plus opportunities..”
Tristam Larder, Co-Head of Regional Investment Advisory EMEA, Savills, commented: “Thanks to a perfect storm of factors such as a favourable currency exchange rate between the Euro and the Won, relatively cheap European debt, the domestic property market in South Korea as well as the relatively stable political climate in Europe have meant that capital has flowed into the European real estate market.
“As we move into 2020, we anticipate that investors will need some time to digest their record number of acquisitions from the last 12 months. We may therefore expect to see a slightly quieter Q1 compared to 2019 with more South Korean players opting to partner with European investors in joint venture purchases as we progress throughout the year.”
Mike Barnes, Associate, European Research, Savills, added: “As we move into a new year the European Central Bank’s predictions that interest rates are more likely to fall than rise, will continue to provide an attractive lending environment. As a result, we expect South Korean capital to be a powerful force in European real estate throughout the next 12 months – particularly in core and core plus opportunities.”