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CMS lawyers can provide future-facing advice for your business across a variety of specialisms and industries, worldwide.
Apart from offering expert legal consultancy for local jurisdictions, CMS partners up with you to effectively navigate the complexities of global business and legal environments.
Our CMS Expert Guides provide you with in-depth legal research and insights.
Learn more
The new CMS European Real Estate Deal Point Study 2023 now includes more than 2,500 transactions. Compiling the study involved comparing all the transactions on which we advised in the period 2010 to 2022, enabling us to highlight developments and trends in the real estate market. The market response to our study indicates that over the years it has repeatedly proved to be a valuable tool when preparing for contract negotiations.
Following the record low of 2021 (19%), investor interest in this segment revived. Its percentage share rose to 24%, making office real estate the most sought-after asset class in Europe alongside residential property.
That made them the most sought-after asset class with regard to the transactions on which CMS advised. The main reason for the popularity of residential properties is the stable income that they generate, which is particularly attractive to investors during uncertain times.
At 54%, their share was almost the same as in the previous year (55%). National buyers, whose investments accounted for 46%, dominated the market as recently as 2020 due to the Covid-19 pandemic. This trend has now reversed slightly in favour of international investors, following the lifting of pandemic-related travel restrictions.
The proportion of transactions in which steps were taken to ensure the buyer met its financial obligations remained at the record high level of 70% seen in the previous year (2021).
On the one hand, the parties agreed to the buyer-friendly statutory limitation rules more often than before. On the other, limitation periods of more than 24 months were often agreed in 2022, whilst there was a slight fall in the proportion of short limitation periods of up to 18 months.
De minimis and basket clauses were agreed significantly more often in 2022 (52% and 42%, respectively), thus setting the market standard even in more buyer-friendly times. This represented an 8% increase in de minimis clauses and a 10% increase in basket clauses in transactions carried out by CMS last year. Most interestingly, the number of transactions with agreements on limits to liability was particularly high in Eastern Europe, including de minimis clauses (70%), basket clauses (52%) and caps (75%) – a trend that has since driven segment growth in Europe more widely.
The volatility in the European real estate investment market during 2022 emphasises the need for investors to remain vigilant and adaptable in the face of ever-changing economic conditions. The ongoing uncertainty in the market has nevertheless created a favourable environment for buyers, enabling them to negotiate high discounts when purchasing properties. The decrease in real estate investment has continued this year. In the first half of 2023, a clear reluctance on the part of investors could be observed. One of the main reasons for this is the constantly increasing interest rate environment. So far, there are no indications of a trend reversal, so further development remains to be seen.
Dr Volker Zerr, a partner in the Real Estate & Public division at CMS Germany and co-author of the study
