Andy Rofe, Invesco Real Estate’s managing director for Europe, has been attending the firm’s global client conference in San Diego in November for the past 20 years. The last time he went, more attendees wanted to speak to him about the region than ever before, he told us at a media dinner Invesco hosted in London this week.

Rofe’s observation of a significant increase in global investor appetite for European real estate opportunities chimes with what delegates heard last week at the PERE Network Asia Summit 2024. There, investors such as Hong Kong insurer AIA Group, Malaysian retirement fund Kumpulan Wang Persaraan and Canadian pension subsidiary Ivanhoé Cambridge said the accelerated pricing dislocation in Europe and the US had boosted the attraction of these markets on the global stage.

As investors pivot their focus to where they perceive the best returns can be found, international investment into these regions has grown. According to research released by MSCI last week, cross-border activity represented 23 percent of commercial property deals in 2023, up slightly from 22 percent the prior year. And while the US was the top destination for overseas capital with $29.9 billion deployed, the UK was not far behind, receiving $22.2 billion. Germany also rose into third position.

Indeed, the UK and Germany are among the epicenters of dislocation-driven opportunities at present – the former due largely to the speed at which property values have corrected, the latter owing to the expected emergence of a wave of distress. Compounding the situation in Germany, several local banks have announced concerns in recent weeks around their exposure to commercial real estate loans in the US, putting further pressure on the health of their domestic real estate loan books and the possibility of bank stress spreading to Europe.

When it comes to capital formation, recent signals corroborate the growing interest in Europe from overseas. Last week, PERE heard Toronto-based Brookfield Asset Management had established a separate Europe-focused sidecar to invest alongside Brookfield Strategic Real Estate Partners V in opportunistic investments in the region – a first for its BSREP series. The vehicle, which is expected to reach more than €1 billion in size, will allow global and domestic investors to augment exposure in light of the favorable opportunities emerging in the region.

And emerging they already are. “Our European deal teams are really busy closing transactions at the moment,” one London-based lawyer told PERE this week. And while at €45 billion, European investment in commercial real estate in Q4 2023 was still low by historical standards, this marked an increase of 22 percent on the previous quarter, ending a run of seven consecutive quarterly declines in deal volume in the region, according to broker CBRE.

Nevertheless, the value correction in Europe is far from over. Indeed, data released by INREV this week shows it is even accelerating: the INREV European Quarterly Asset Level Index recorded a total return of -1.58 percent in Q4 2023, down from -0.39 percent the previous quarter. Analysis of lender attitudes conducted by affiliate title Real Estate Capital Europe suggests price discovery in Germany and France, for example, is around 12 months behind the UK.

With some 27,000 delegates from around the world preparing to attend MIPIM, one of the world’s largest property events, in Cannes next week, the historic opportunities on the table in some parts of Europe – and the increasing viability of acting upon them – are sure to be the talk of the Croisette, just as they were at Invesco’s media dinner.