European investment up 42% in Q4: CBRE

European commercial real estate investment turnover grew to EUR 25.7 bn in the fourth quarter (Q4) of 2009, up 42% on the previous quarter, according to new data issued by CB Richard Ellis. This is the highest quarterly total since Lehman's collapse in September 2008, and confirmation that the upturn in investor interest that started in the major European markets in mid-2009 has now spread further afield in the region.

The Q4 activity brings total 2009 turnover to EUR 70 bn, compared with EUR 121 bn reported for 2008 as a whole. CBRE expects the European investment market to continue this growth in 2010.

Traditionally, Q4 is the busiest quarter of the year, therefore seasonal effects have also played a part in these activity levels, the adviser said. Many European markets saw a rush of deals being completed towards the year-end. Overall, 17 out of the 26 monitored markets reported Q4 as having the highest quarterly turnover in 2009.

A very sharp turn-around in activity occurred in Europe during the course of 2009. Following a recovery in sentiment from around April, completed transactions picked up strongly from mid-year, with investment deals totaling EUR 43.9 bn completed in the second half (H2) - a 71% total increase compared to the first half (H1) of the year in Europe.

Almost every market saw an increase in investment activity quarter-on-quarter in Q4, as well as on a half-yearly basis. Most notable was the fact that transactions in both France and Germany - the two largest markets in continental Europe - more than doubled in H2 compared to H1 2009. CEE experienced a particularly sharp uplift (of 231%) in H2, but this was coming from a very low base. Investment in the UK continued to increase, with H2 growth of 64% relative to H1 2009. This was below the European average, but reflects the fact that the UK market had already started to recover by the middle of the year, earlier than most other markets.

The recovery in overall turnover has gone hand in hand with a revival in cross-border investment activity, after a first half which was dominated by domestic investment. The German Open-ended Funds alone spent over EUR 1 bn in December 2009, with at least 13 separate acquisitions spread across seven European markets.