Transactions on European office markets accounted for half of investment activity in the first quarter of 2012. Research published by CB Richard Ellis (CBRE) showed EUR 12 billion (GBP 9.6 billion) was ploughed into the sector in the three months from January to March. The gains in the office market were offset by a fall in interest in retail assets, after this type of property consistently attracted a greater proportion of the available funding during 2010 and 2011.
Head of Europe, the Middle East and Africa capital markets at CBRE Jonathan Hull commented: "2012 has seen an increasing amount of good-quality office property coming to the market. This has met with strong demand from investors who see the lack of development activity over recent years as a potential source of rental growth in future years." Earlier this month, the Savills report into commercial development activity in the UK revealed schemes in the private sector were the driving force behind growth in the construction industry. Work on private office projects climbed in April, but at a slower pace than in March, however, activity in the public sector fell in the same period.
The UK, Germany and the Nordic countries remain the favoured destinations for commercial real estate investment, the CBRE report stated, as their stability has stood out against the wider backdrop of the eurozone crisis. Overall, the amount of money put into European commercial property fell by 18 per cent year-on-year in the first quarter, to stand at EUR 23.8 billion. The firm is not overly pessimistic about the outlook, though, pointing to a number of large-scale transactions that are still in the pipeline and are expected to come to fruition during the second quarter of 2012. Mr Hull acknowledged political events, such as elections in Greece and the recent French presidential poll, may have an effect on investment activity, but he stressed the appeal of prime assets in core locations has not diminished.
- Tuesday 29 May 2012