Commercial real estate investment activity in Europe reached a record level in the third quarter of 2007 despite the credit squeeze that emerged over the summer, property advisor CB Richard Ellis Group said in a market report published on Wednesday. Total investment in European real estate rose 24% to approximately EUR 65 bn in Q3 this year, compared with the same period in 2006.
Commercial real estate investment activity in Europe reached a record level in the third quarter of 2007 despite the credit squeeze that emerged over the summer, property advisor CB Richard Ellis Group said in a market report published on Wednesday. Total investment in European real estate rose 24% to approximately EUR 65 bn in Q3 this year, compared with the same period in 2006.
Investment activity remained generally strong across the entire European market, with France standing out by recording almost EUR 8 bn in transactions in the third quarter compared with EUR 4.6 bn in the same period last year. As a result, year-to-date investment activity in France has reached EUR 21.5 bn, nearly matching the level for all of 2006, CBRE said.
Although there are signs that the UK has been hit harder than other European countries by the turmoil in the financial markets, the UK commercial property sector recorded a 'robust' EUR 20 bn in activity in the third quarter, on a par with the level in recent years. Central London continued to account for the largest share of activity - EUR 10.7 bn - with foreign buyers responsible for approximately EUR 5.8 bn of acquisitions in this market, the report said.
'The strength of the third quarter suggests that while the credit squeeze has had some impact, we have continued to see high levels of investment activity in Europe. However, some deals that were finalised in the third quarter were initiated before the credit difficulties surfaced,' Jonathan Hull, executive director of EMEA Investment for CBRE, said. 'While there is evidence to suggest that some of the largest deals are requiring more effort to finance, deal activity between EUR 50 to EUR 150 mln, where the debt element does not need to be securitised, remains robust. We are continuing to see strong capital flows across the European markets.'
Nick Axford, executive director of EMEA Research & Consulting at CBRE, added: 'The other notable trend over recent months is the re-emergence of equity-driven investors who are unaffected by more stringent lending standards. We expect to see increasing amounts of equity-based capital targeting key European markets in the months ahead.'