There has been a significant reduction in the level of investment in European commercial real estate in the first quarter of the year, compared to the final three months of 2011. According to the latest research from Cushman & Wakefield, investment volumes were down by 31 per cent quarter-on-quarter to stand at EUR 25.3 billion (GBP 20.3 billion). However, this only represented an annual fall of 1.5 per cent, with the cost of transactions in the year to March standing at EUR 121.5 billion.
Head of capital markets for Europe, the Middle East and Africa at the firm Michael Rhydderch stressed there is still plenty of interest in the sector, noting foreign investors are currently much more active than those operating in their domestic markets. There are reasons to be concerned though, he explained: "A shortage of stock, of debt finance and of confidence is holding the market back by perhaps more than we expected given the level of equity demand and the momentum at the start of the year."
The Cushman & Wakefield research revealed the three core European investment destinations of Germany, France and the UK had lost market share during the first quarter of the year; however, the UK still has the largest office and industrial investment sectors, while it is now second in terms of retail assets to Germany. A recent CB Richard Ellis (CBRE) report found the UK's commercial property market improved in April, with headline returns climbing from the 0.1 per cent recorded in March to 0.2 per cent.
London offices are still the main area of focus for many financiers seeking real estate investment opportunities in the UK, although data for the retail sector was more positive. Nick Parker, senior analyst of economics and forecasting at CBRE, commented: "Buyers continue to take a cautious stance in 2012, influenced by prevailing economic uncertainty. That said, London remains a clear focal point for active investors, with a strong GBP 3.7 billion exchanged in the first quarter, driving continued competition and positive capital growth in April."
- Thursday 10 May 2012