European investment volumes recover strongly in 2010: JLL

Liquidity returned to the market in 2010 as equity rich investors sought to take advantage of attractive pricing to acquire low-risk assets in prime locations. As a result, European investment volumes jumped 48% in 2010, with EUR 102 bn traded, according to Jones Lang LaSalle's latest Capital Markets bulletin.

The UK captured the greatest proportion of investment capital at EUR 37 bn (36%), followed by Germany (17%) and France (11%), whilst the Nordics also had a strong end to the year.

Investment volumes are projected to grow further in 2011. JLL said that while there is a risk that a lack of suitable opportunities may constrain transaction volumes, given the activity in the market during the early part of 2011 and volume of equity pools targeting European markets, the firm believes that there is the potential for activity to increase by more than 30% this year.

Against a backdrop of rising inflation, real estate is an attractive hedge, although it is widely accepted that interest rates will rise later this year.

The major Western European markets of the UK, France and Germany will continue to dominate investment volumes with further growth forecast. Significant increases are anticipated in a number of other markets, however, with notable performers including Finland, where volumes are forecast to almost double following EUR 1 bn of transactions in 2010, and Russia, which is expected to see an increase of 35%.