C&W sees investment volume falling 11% in 2012

Real estate investment volume in EMEA will total some EUR 112 bn this year, a drop of 11% on 2011, according to David Hutchings, Head of European Research at Cushman & Wakefield.

'Prospects for the rest of the year have been cut despite the positive yield gap property enjoys over bonds. However, at least some investors are finding their way through the impasse created by stock and finance shortages as well as slow decision making and this gives us some confidence that deal levels will at least be maintained.'

Volumes rose in the second quarter of 2012 by 8% to EUR 29.2 bn compared with Q1, but year-on-year the increase was confined to 0.6%. The first-half figure also marked a fall of 19.4% on the average of the previous five years and a decline of 17.7% compared to H2 2011.

Hutchings believes the eurozone woes should prove to be a short term issue - or even an opportunity. 'While a miracle cure for European problems does not exist, in our opinion the eurozone will not disintegrate - the economic, social and political costs of failure are just too high. Hence while Q3 may be quiet due both to the holiday period and the run-off from the debt crisis, we still expect a solid pick up in Q4.'

Overall, core markets continue to attract most investment, with the UK, France and Germany seeing 60% of all activity in the first half of the year, modestly down on the 62% seen in 2011. However, while the big three saw volumes rise 12.3% thanks to a strong increase in France, the Nordics have been the biggest winners - pushing up to an 18% market share, ahead of Germany for the first time since 2008. At the other end of the risk spectrum, Eastern Europe also saw a strong rise and took a near 7% market share, with Russia the powerhouse behind those figures.

Hutchings anticipates a steady rise soon in the volume of assets that the banks and others are bringing to the market, possibly led in continental Europe by Spain as its banking rescue plan works through. ' While not a deluge, this could at least mark the start of an upturn in supply that will gather pace in 2013,' he noted.