Commercial property investment across Europe shows 42% rise

Commercial real estate investment has risen 42 per cent in Europe in the past three months compared with the previous three months to the highest level since the collapse of Lehman Brothers in 2008.

More than €25.7bn ($37bn) of property deals were done in the fourth quarter of 2009, double the levels being traded in the first two quarters of the year, according to CB Richard Ellis, the property consultancy.

This is the highest quarterly trade since Lehman's collapse and the beginning of the sharpest point of the property slumpCB Richard Ellis.

The data support anecdotal evidence of a rush back to property investment by a range of institutions after a bounce in values in markets such as the UK since the summer.

The rise in fourth quarter activity brought total 2009 turnover to €70bn, still lower than the €121bn recorded in 2008. Almost every European market saw an increase in investment activity in the fourth quarter.

The UK took by far the largest share of the new investment, with more than a third spent on British property.

Investment in the UK rose 64 per cent in the second half compared with the first six months of the year.

The next largest market was Germany, which accounted for about 15 per cent of investment activity.

The fourth quarter is generally one of the busiest periods owing to the rush of deals being completed towards the end of the year, although CBRE said theturnround was expected to be sustained into 2010.

Michael Haddock, CBRE's director of European research and consulting, said the upturn in investor interest started in the most important European markets but was spreading further in the region.

The strongest growth occurred in central and eastern Europe, an area traditionally seen as higher risk than more established markets in western Europe, although the pick-up came from a lower base.

There was also a significant increase in cross-border investment in the second half of the year.

German open-ended funds alone spent more than €1bn in December, with at least 13 acquisitions across seven markets.

Sovereign wealth funds from outside Europe also contributed to the rise in activity.

UKCIG Property News, January 2010 from Financial Times