GLOBAL - The majority of real estate investments this year has been focused on core assets, but some investors are beginning to show a greater appetite for risk, according to global capital markets experts.

Most of the $90bn (€62.5bn) in global real estate transactions recorded by Jones Lang LaSalle in the first quarter of the year were focused on prime stock in core markets.

But Arthur de Haast, head of the international capital group at JLL, said the picture was beginning to change.

"We continue to see strong interest for core product in gateway cities from institutional and private investors," he said.

"However, investors are only moving into riskier markets and products on a selective basis, with many waiting to see more bank-released product or stronger fundamentals first."

Global transaction volumes were 38% up on the first quarter of last year, and 20% below the activity seen in the final three months of 2010, although this is to be expected with Q4 periods typically seeing a surge of activity.

In Europe, CB Richard Ellis recorded €26.7bn in transactions volumes in Q1 2011, itself a 26% increase on the same period last year and a fall from €38.6bn in Q4 2010.

CBRE also noted an increasing investor interest in prime properties in what are often perceived as riskier markets, including Spain and central and Eastern Europe.

Jonathan Hull, head of EMEA capital markets at CBRE, said: "The growing influence of institutional type capital in the direct European property investment market is one of the key themes this year.

"Increasingly diverse in origin, from Canadian pension funds to Middle and Far Eastern capital, it will continue to support the core end of the European market.

"This is prompting specialist managers to look into more 'value-add' opportunities - a move we expect to see more of this year."

Last week, Henderson Global Investors published a report exploring whether investors should be moving up the risk curve away from prime assets in core markets to opportunities in markets like Spain.

Other fund managers, including First Property, are now encouraging investors to consider investing outside the safe haven of prime real estate in core markets and to not assume that it is the lowest-risk strategy.