European property investment falls 61% in 2008 says Atisreal

European commercial property investment fell 61% in 2008, while offices take-up dropped 19%, according to the latest European market indices report issued by Atisreal. The report, which measures prime data across seven major European cities, said that prime yields across Europe have continued to rise since the summer and there are currently no European prime yields below 5%.

'The investment activity seen across Europe in 2008 was mainly from cash-rich buyers, particularly after the second quarter when the slowdown really started,' said Andrew Cruickshank, international investment director at Atisreal. 'In the European offices market, although take-up was down 19% for 2008, and despite Central London reacting more quickly to the downturn and prime rents readjusting at lower levels, rents across Europe seem to be much more resilient with demand high for offices at lower costs.'

On the other hand, Germany had its third best-ever record in 2008 in terms of take-up, with most activity taking place in the first half of the year. Developed economies across Europe are entering a recession that is expected to last at least until the second quarter of 2009, the broker said.

Cruickshank added: 'Employment reductions throughout the recession will significantly affect the occupier market, while the tightening financing conditions will continue restraining investment deals. However, on the plus side, the UK is looking like a good place to invest again, particularly for cash-buyers and, in terms of the office market, occupiers could achieve some very favourable deals this year as landlords will be willing to decrease rents and offer higher incentives to attract them.'