Europe's biggest real estate managers are making their first investments in southern Europe since the financial crisis as low prices and diminishing risk make commercial properties more attractive.
Axa Real Estate Investment Managers, the largest European property fund manager, bought Barcelona office buildings from the Catalan government for €172 million (HK$1.7 billion) last month, only its second purchase in the country in five years.
When the unit of Europe's second-largest insurer considered buying the same properties two years ago, it rejected the idea.
"There was too much uncertainty in the market at the time," said Anne Kavanagh, the Paris-based insurer's head of global asset management. "There's an indication now that we're at or near the bottom, even though there might be more volatility ahead."
Insurance companies such as Germany's Allianz, private equity firms and sovereign wealth funds are seeking deals in Spain and Italy as the economic prospects for the countries improve and the likelihood of a euro currency break-up recedes. Returns in the commercial hubs of Madrid and Milan have become more attractive compared with other European cities after a slide in investment in both countries last year boosted yields.
Axa Real Estate, which has €45 billion of assets under management, agreed to buy an office park in Milan last month, its first commercial property transaction in Italy since 2008.