Strong first quarter for real estate investments despite rising interest rates and inflation
In the first quarter of 2022, €3.5 billion was invested in real estate. The investment volume for logistics real estate amounted to over €1.3 billion, a new record. 38% of the total investment volume in the first quarter was in the logistics sector. This was noted by CBRE the Netherlands, part of the listed CBRE Group, the world's largest real estate consultancy firm, based on the figures for the first quarter of 2022.
The demand for logistics investments remains high, partly as a result of the expected structural growth of online shopping. Combined with an increasing demand for logistics space and the scarcity of development locations, it means that investors are anticipating above-average rental growth of logistics spaces.
Retail Investment Regains Popularity
The demand for retail real estate is growing again. In the first quarter of 2022, €373 million was invested in retail real estate. That is more than a threefold increase in volume compared to the first quarter last year. The attractive risk/return ratio attracts private investors as well as specialist retail investors and investor developers.
The office sector, which has traditionally attracted the most investor interest, was off to a slow start this year. The investment volume for offices amounts to over €605 million in the first quarter. During the remainder of the year, relatively large numbers of office investments will come to the market, for which there is high demand.
The housing market continues to experience a shift in investment demand that is only slowly finding its way into housing products. The investment volume amounted to €940 million in total. Just like last year, 80% was invested in new construction developments. Partly as a result of these investments, more than 2,500 new rental homes are being developed to combat the housing shortage. For the first time, more than half of these investments were made by foreign investors.
To date, the investment volume is in line with CBRE's expectations, despite the rising inflation and interest rates. For the rest of the year, more uncertainty is expected in investment products that are more dependent on financing, as well as in new construction products that face significantly higher construction and financing costs. Parties with a lot of liquidity will want to buy real estate at an accelerated pace in order to compensate for part or all of the higher inflation in their rental flows.