We reported on the Investment Screening Regulation under epf19-22 of 11.03.2019. It was quite a revolution at the time, the world’s top destination for foreign direct investment (FDI) having finally decided to protect its strategic assets. Its scope covered “land and real estate crucial for critical infrastructure” (which meant any land and buildings connected to energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities) and also farming land (food security).


The Commission Staff Working Document (SWD) under the Commission’s 2017 Proposal for  a Regulation (epf17-82 of 10.10.2017) had shown that real estate was the second most important FDI in the EU: a total, cumulative stock of € 273 billion, just after computers & electronics.  And what a progression! From € 0.02 billion of annual foreign investment into real estate in 1995 to € 23.10 billion in 2016.


No longer. The SWD accompanying the Second Annual Report in its Table 2 “Number of foreign acquisitions and greenfield investments: share over total for 2021 and percentage change on 2020 and 2019. Detail by target sector” puts ‘real estate’ in 7th place and ‘construction’ in 8th, with shares of 2.9% and 2.7% respectively. True, land and buildings are surely a big part of ‘retail’ (4th place at 7.1%), ‘accommodation’ (9th at 2.4%), health (10th at 2.3%) and ‘agriculture’ (15th at 0.7%), but just a few years ago, ‘pure’ real estate was number 2.


One reason – not mentioned in the SWD – is Brexit. The UK was the EU’s real estate FDI Mecca.


The other reason is clear from the table: 55.9% of all FDI into the EU is now ICT (information, communications and technology) and manufacturing. The Chinese and Russians were buying up what they needed most.


There is a  section in the SWD (electronic pp. 17-18) “Russian shareholding in Europe” showing that Russia either influences or controls 30 000 companies in the EU and real estate is number 2! (2714 property companies under control and 2470 under influence). Russians control 36 oil and gas companies and 33 electricity companies.


It won’t be a surprise if the Commission soon seeks to sharpen the Investment Screening Regulation.


Full EPF Secretariat report and text of the screening report and working document under epf22-42 of 07.09.2022