DTZ sees uneven recovery in investment volumes in Q2

Direct real estate investment across Europe totalled EUR 21.4 bn in Q2 2010, marking an 11% increase on the EUR 19.3 bn recorded in Q1 2010 and continuing the growth in the market since its low point in early 2009, according to global real estate adviser DTZ in its latest investment market update for Europe.

Commenting on the figures, Magali Marton, head of DTZ CEMEA Research said: 'The recovery in volumes across Europe remains uneven. Over the quarter, of Europe’s major markets, the UK posted a 29% increase in volumes to EUR 7.9 bn, with France registering a 23% increase to EUR 2.2 bn. In contrast volumes in Germany slipped 19% to EUR 3.8 bn.'

Private property vehicles, including third party fund managers remained the dominant buyers over the quarter, with purchases totalling EUR 10.1 bn. Institutional investors were increasingly active with EUR 2.9 bn of purchases, while listed property companies accounted for a further EUR 2.5 bn of acquisitions.

Activity from inter-regional investors increased this quarter, accounting for 19% of acquisitions. Only Asian and Middle Eastern investors were net buyers over the quarter at EUR 1.5 and EUR 1.1 bn respectively, reflecting a number of high-profiles deals over the period. In contrast European investors were the net sellers with EUR 1.6 bn, primarily driven by UK investors who sold a net EUR 1.5 bn predominantly in the UK.

'Uncertainty over the recovery in Europe’s economies poses a downside risk to the recovery,' Mortan continued. 'This combined with planned legislative changes to German Open Ended Funds, means that we have seen a reduction in net flows to open ended funds which could hold back significant new investment in the short term. On a more positive note, however, overall demand remains strong and the weakness of the pound and the euro against the dollar make Europe’s real estate markets attractive to overseas investors, with investment flows from the Middle East and Asia likely to persist.'