CB Richard Ellis issued new European Capital Markets report as of Q3 2009

19.11.09

According to the report, the latest trends in the European commercial real estate investment market show that there are investors that are keen to buy at the moment. Increasing transaction volumes and falling yields are indicative of growing confidence, but only to an extent. The fact that investors are crowding into the prime end of the market reveals that they are still uncertain about the future of occupier demand and are unwilling to take on vacancy risk that would expose them to short term changes in rental value. Total investment transactions in the commercial real estate sector reached €17.3 billion in Q3 2009, over 40% higher than in Q1. However, the increase was from a very low base and turnover is still well below the level seen in previous years. At a country level, both UK and Germany showed strong growth in turnover in Q3. In the case of the UK this improvement was expected, but the growth in activity in Germany is something of a surprise. Another important difference between the UK and Germany is the profile of investors. The recovery in the UK has mainly been driven by foreign investors. In Central London they have made up over 80% of buyers (by value) so far in 2009. In contrast the German market is almost entirely domestic at the moment. Local pension funds and Spezial Fonds are quite active buyers, but foreign investors are conspicuously absent.

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