CMS European Real Estate Deal Point Study 2023

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.

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