Robustness of capital flows into the European commercial property markets during the global financial crisis

Abstract

PurposeThe purpose of this paper is to assess the robustness of capital flows into European commercial property markets during the global financial crisis (GFC) – over 2007‐2008; particularly highlighting differences between the developed and developing European markets.Design/methodology/approachUsing the Real Capital Analytics database of over 49,000 commercial property transactions valued at over $1.5 trillion in 2007‐2008, the robustness of capital flows into the European commercial property markets is assessed during the GFC. The impact of the GFC on capital flows is assessed in both a regional context and global context, as well as between the developed and developing markets in Europe.FindingsThis paper assesses the robustness of the capital flows into the commercial property markets in Europe over 2007‐2008. Clear differences emerge regarding the relative impact in Europe in a regional and global context, as well as between the developed and developing European markets. The results highlight the robustness, stature and significant relative contribution of capital flows into the European commercial property markets across a range of property investment characteristics during the GFC.Practical implicationsGiven the importance of commercial property as an asset class for institutional investors, this paper assesses the robustness of capital flows into the commercial property markets in Europe. By embedding this in a regional and global context, the robustness, stature, relative impact and significant contribution by European commercial property markets in the uncertainty and volatility of the environment of the global financial crisis is articulated for global property investors. Clear differences between the developed and developing markets in Europe are identified.Originality/valueUsing over 49,000 commercial property transactions, this paper is the first attempt to rigorously and empirically assess the robustness of capital flows into global commercial property markets, with a specific focus on the European commercial property markets during this unique international event of the GFC. Given the significance of commercial property as an institutional asset class, this empirically validated research enables a more informed and critical understanding of the impact of the GFC on capital flows into the commercial property markets in Europe, as well as identifying global property investor considerations regarding the ongoing significance for capital flows in their commercial property investment strategies in Europe and globally.