Retail accounted for just 18% of direct real estate investment volumes in Europe during the first half of 2007. 'This is down from an average of 25% in previous years, reflecting a general concern about the retail sector', Simon Marx, head of property forecasting and analysis at consultancy Experian, told a real estate seminar in The Hague on Tuesday.

Retail accounted for just 18% of direct real estate investment volumes in Europe during the first half of 2007. 'This is down from an average of 25% in previous years, reflecting a general concern about the retail sector', Simon Marx, head of property forecasting and analysis at consultancy Experian, told a real estate seminar in The Hague on Tuesday.

Direct investment in European real estate came to EUR 121 bn in the first half of 2007, and investment volumes for the full year are forecast to come in near the record figure of EUR 242 bn registered last year, he said. But the combination of rising interest rates and almost flat consumer spending has impacted on the investment performance of the retail sector in Europe. While several firms are looking with increasing interest at the German retail market, Experian professionals threw cold water on investor enthusiasm by arguing that the German consumer market remains weak.

'German consumer spending has increased from nothing to not very much,' said William Thomson, Experian's director of International Economics. Following three consecutive record years of investment in Germany, 2007 is not forecast to break last year's record. Commercial property investment volumes in Germany stand at EUR 27 bn so far this year, about equal to the same period last year. The country registered a record of about EUR 50 bn invested in commercial property for the full 12 months last year.

France saw a record number of portfolios transactions in the first half, and commercial real estate investment in the country has reached EUR 13.3 bn so far this year, Experian said. The level of investment into the French office sector has slumped to 75% of the total this year, from 85% a year earlier. The difference has been directly feeding the industrial sector, while retail investment remained unchanged.