EUROPE - Liquidity for larger deals has improved due to greater activity from cross-border investors, according to a CBRE report on European retail.

A small number of large transactions in the German retail market drove a 15% increase in European real estate investment turnover to €15.7bn in the first half of 2010, compared with the same period last year.

Investment activity in the German market itself almost doubled to €4.1bn.

Overseas investors were behind a significant proportion of the increase - 52% in the first half of 2010, compared with 22% for the whole of 2009.

CBRE data for central and eastern Europe (CEE) markets showed retail transactions totalling €630m in the first half, up 190% from the same period last year. 

Activity centred on a core group of markets: Hungary, Poland, Romania and Russia.

As in mature Europe, CBRE noted a growing divergence between prime and secondary assets.

However, across Europe, investors are beginning to look beyond prime to core-plus and value-added shopping centres in search of returns.

Investors in Polish retail in particular are looking outside core assets, CBRE said.

In some CEE markets - notably Bulgaria and the Czech Republic - there are few constraints on supply to the end of 2011.

Despite a recent decline in the development pipeline across the region, weak consumer confidence and limited demand from retailers will add pressure in these markets and are likely to accelerate the flight to prime, CBRE said.

Meanwhile, a report from DTZ reported investment volumes in the Czech Republic of €215m in the first half - up 233% from the same period last year. 

However, the withdrawal of German funds since 2008 has negatively impacted the market. 

German funds, which had previously dominated the market, accounted for less than 5% of transactions in the first half.

The report's authors noted that German funds were unlikely to return to the market in the short term.