Investment
from South Korea into Europe is expected to slow down in the first quarter of
2020 after it grew by 122% year-on-year in 2019 to €12.5bn (£10.6bn).
“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,” said Tristam Larder, co-head of regional investment advisory EMEA at
Savills.
“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.”
However,
it is anticipated that South Korean capital will still be “a powerful force” in
European real estate over the course of 2020, particularly in core and core
plus opportunities. The European Central Bank’s predictions that interest rates
are more likely to fall than rise will make for an ongoing attractive lending
environment, according to Savills associate European Research Mike Barnes.
Preliminary
figures from Savills indicate that France was the biggest beneficiary last year
from South Korean investment with volumes of around €4.5bn, up from €355m in
2018, while €1.9bn was invested in Germany compared with €1.3bn in 2018.
This,
Savills said, was owing to a favourable exchange rate between the euro and the
Korean won, comparatively cheap European debt and a relatively stable political
climate making continental Europe more attractive and superseding the UK,
which, in turn, saw investment from South Korea drop by 27% from €2.2bn in 2018
to €1.6bn for 2019.
The
office sector accounted for around 70% of the purchases by South Korean
investors. This was followed by industrial assets, which made up 25% of
investment volumes in 2019, following €1.8bn of industrial transactions in the
final quarter.
One of
the most active investors was Samsung Securities, which acquired the Lumière
building in Paris as part of a joint venture with Primonial for €1.2bn, while a
consortium of Hana Financial Investment and NH Securities forward-funded the
EDGE office redevelopment in Amsterdam.