European transactions down 53% in 2008 - CBRE

There are signs of some investor interest in property markets where yields have moved out sharply, but it is to early to predict a recovery of transaction volumes, CB Richard Ellis has said.

In its Global ViewPoint for the fourth quarter of 2008, the property adviser said that while the precise impact varied from one city or country to another, it was clear that the world's property markets continue to be impacted by global financial and economic concerns.

Nick Axford, head of EMEA Research and Consulting, said: 'Property investment transactions were down 53% across Europe in 2008, broadly in line with the global average of 59%, with the fourth quarter seeing particularly low levels of activity everywhere in the aftermath of the Lehmans collapse.

'Some increase in investor interest is being seen in markets where yields have moved out most sharply, and we must wait to see whether this represents the first stages of a recovery - however modest - in transaction volumes. With equity investors around the world awaiting the right time to enter the market and a probable increase in the number of forced sellers, the likelihood is that activity will start to pick up at some stage in 2009; the key question is when.'

Leasing activity in the EMEA region weakened in the major markets in Q4 2008. Vacancy is generally drifting up, while prime rent declines were evident in London, Madrid, Frankfurt, Paris and some of the Scandinavian markets.

Axford: 'If anything, the rental decline in Europe is currently more modest than that being seen in the major markets of Asia and North America, yet this may change. Office leasing activity is already weakening, down by 13% in Europe in 2008, and is expected to fall further in 2009 which will accelerate the rate of rental decline.'

'The relatively modest development pipeline in many markets will help mitigate the falls, and offers the prospect of rental increases in the medium term. However for the immediate future we can expect falling rents as landlords compete to ensure that their buildings remain income-generating,' he added.