Europe's direct real estate investment hits record EUR 116 bn in H1 2007

Direct real estate investment transactions across Europe reached a record EUR 116 bn in the first half of 2007, a 4% rise year-on-year, according to provisional figures from Jones Lang LaSalle. The flow of capital into real estate continues unabated with strong levels of foreign capital across the region. 'As investors continue in their search for yield and value, increasing activity is evident in Europe's smaller markets such as Finland and the emerging markets of Eastern Europe,´ commented Tony Horrell, ceo of European Capital Markets at JLL.

Horrell added that 'no tailing off in investor demand across Europe as a whole' is foreseen for the second half of the year. 'We do anticipate more stock coming to the market,' he said. Market volumes continue to be dominated by the largest three markets of the UK, Germany and France, which combined account for over two thirds of investment activity in the first half of the year. All three have seen volumes at or above last year's record levels.

Unlisted funds, including third-party managed funds, remain the most active players in the market. Net-inflows of monies into indirect vehicles remain strong, fuelling demand for commercial real estate. German open-ended funds which were key sellers in 2006 are now active buyers, not only internationally, but also at home focussing on prime assets in the major German cities. The growth of REIT markets across Europe is leading to increased trading, notably in the UK where the newly converted property companies have been strong sellers as they benefit from their new tax status.