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European Real Estate Investment Proved Volatile in 2022, Despite a Promising Start

Total investment across the European real estate market fell by around 14% in 2022 compared to the previous year, coming in at €248 billion, according to global law firm CMS’ latest European Real Estate Deal Point Study.

During the first six months of 2022, the markets rebounded from the Covid-19 pandemic, resulting in a flourish of transactions and total investment for the period – matching the record levels seen in 2020. In the second half of 2022, however, the sharp increase in financing costs prompted cautious investment behaviour, leading to a decline in overall investment levels across the continent. The decline was particularly pronounced in the fourth quarter of 2022, with investments plummeting by 57% compared to the same period in 2021, reaching approximately €47 billion.

The report noted that investment trends varied widely across countries, with Italy (+25%), Spain (+29%) and Belgium (+177%) experiencing greater investment volumes in 2022. France (+1%) maintained investment levels similar to the previous year, whilst Germany (-16%) and the UK (-19%) witnessed a decline.

Dr Volker Zerr, a partner in the Real Estate & Public division at CMS Germany and co-author of the study, said: “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.”

CMS’ analysis of the real estate market in 2022 revealed the following key trends:

  • Demand for office property is on the rise again. 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.
  • Investment in residential properties accounted for a 24% share of the market. 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.
  • International investors accounted for the majority of real estate investments. 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.
  • Sustained a strong desire for security on the part of sellers. 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).
  • Buyers were frequently able to negotiate favourable terms with regard to contractual provisions on limitation periods. 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.
  • Notable increase in seller-friendly limits on liability. 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.

For further information, please contact:

Darina Gordienko

E: darina.gordienko@cms-cmno.com

T: +38044 391 3377

Notes to editors:

About CMS Cameron McKenna Nabarro Olswang Ukraine

The Ukrainian team of CMS Cameron McKenna Nabarro Olswang has been fully operational since the war and provides its services from several locations including in Budapest, Kyiv, and western Ukraine.


Founded in 1999, CMS is an integrated, multi-jurisdictional organisation of law firms that offers full-service legal and tax advice. With 80 offices in over 40 countries across the world and more than 5,000 lawyers, CMS has long-standing expertise both in advising in its local jurisdictions and across borders. From major multinationals and mid-caps to enterprising start-ups, CMS provides the technical rigour, strategic excellence and long-term partnership to keep each client ahead in its chosen markets.

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