Cross-border investors raise market share in Europe

Commercial property investment volumes in Europe rose by a better-than-expected 17.7% in the final quarter of 2011 to EUR 36.8bn, according to Cushman & Wakefield. For the full year, investment volume totalled EUR 126.2bn, marking an increase of 7.8% on 2010. This is about 10% higher than the EUR 115 bn reported earlier this week by CBRE.

The growth was propelled by foreign investors, who saw their market share rise to 36% from 33% in 2010. Investors have continued to show a strong interest in core markets, with the UK, Germany and France by far the most in demand, taking 61.4% of all investment for the year. The PIIGS (Portugal, Italy, Ireland, Greece and Spain) by contrast saw volumes fall 25.9% over the year versus 17.7% growth for the rest of the Eurozone.

Emerging markets turned in the strongest growth, accounting for seven of last year’s top 10 destinations. Star performers were Bulgaria, Estonia, Slovakia, the Czech Republic, Hungary, Russia and Croatia, with only Switzerland, Denmark and France from the West appearing in the top 10.

Risk appetites did change markedly as the year went by however. CEE markets saw volumes rise 75% over the year while Western markets grew by just 2.8%. However, between the first and second halves of the year Western volumes rose 19.7% while CEE volumes were flat at 0.1% as buyers grew more cautious with the Eurozone debt crisis picking up

Volumes overall were flat in the Nordic region, with demand good but little supply at the price investors wanted to pay. Only Finland saw a decline in volumes however, with the other non-Eurozone Nordics all saw some level of growth, notably Denmark.

For 2012, C&W expects turnover will hold firm, roughly matching last year's performance.