EUROPE – Real estate investors should consider non-core European markets such as Sweden and Poland as liquidity becomes as significant as relative value in decisions on which markets to target, according to DTZ's '2013 Money into Property Europe' report.

Although a 6% growth in investments to €118bn in 2012 was largely confined to core markets that accounted for 50% of overall investment – the UK and Germany, with some interest in the French market – the report identified liquid non-core markets as attractive to international investors.

"With almost all European markets attractively priced, investors need another differentiator," the report said.

Much of the increase (45%) in activity last year was attributable to inter-regional investment, which accounted for just over 24% of market share, up from 17% in 2011.

DTZ said the trend would likely increase over the next few years as sovereign wealth funds and fund managers adopted – or returned to – strategies focused on international diversification.

The resulting liquidity boost would be "a big positive sign" for property markets.

In addition to their focus on core markets, 61% of investors surveyed by DTZ reported increased difficulty accessing prime assets as risk aversion increased competition.

In contrast, 69% said they found access to secondary assets easy or normal, up from 60% last year.

Investors are overall more optimistic than lenders about the European recovery, according to the report.

Yet more than 50% of lenders said they had lent against secondary assets and/or against assets in secondary and tertiary cities.

However, while 74% said they planned to increase their lending for prime investments in first-tier cities, only 29% planned to increase lending for investment in second- and third-tier cities, with a clear focus on prime assets.

Non-bank lending – that is, debt provided by institutions or debt funds – increased by 80% last year to €34bn from €19bn in 2011.

At the same time, property companies collectively raised €15bn via corporate bonds, up 70% from the previous year.

Overall, DTZ suggested $120bn (€92.1bn) would be available for investment in European real estate over the next two years – "sufficient to plug the funding gap in the near term".