Germany, Nordics and CEE top investor lists in 2011: CBRE

Turnover in the European real estate investment market totalled EUR 100 bn in 2010, representing a significant increase of 35% compared to 2009. This growth is expected to continue in 2011 at a rate of 10 to 15%, according to research released by CB Richard Ellis.

The report predicts that Germany, the Nordics and Central and Eastern Europe will be of particular interest to real estate investors over the coming 12 months. CBRE also pinpoints Greece, Spain and Portugal as countries where stretched government finances will significantly impair economic growth, and in turn, investor interest.

'Sovereign debt risks, volatile bond markets and fiscal austerity will be potent influences on Europe's economic weather in 2011, with clear potential for squalls and storms to affect the progress of recovery,' said Peter Damesick, Chief Economist EMEA at CBRE. 'With marked divergences in economic performance creating major tensions in the Eurozone, probably the most beneficial development for European economies is for Germany's impressively strong upturn to translate into higher consumer spending in the continent's largest economy and boost demand in the region as a whole.'

European retail is identified as an attractive real estate sector as investors search for prime stock in 'core' European countries. This trend has been prominent over the past two years and looks set to continue at the expense of the offices sector, with large regional shopping centres being a focus of particular attention.

Although investors have remained focused on their own national markets in the past 12 months, cross-border investment is expected to rise in 2011, with particular importance placed on sovereign wealth funds and state pension funds, which were particularly active towards the end of 2010. It is likely they will replace the American opportunity funds in the market.

Michael Haddock, director of EMEA Research at CBRE added: 'There is no shortage of capital targeting the European real estate market, but it remains predominantly risk-averse and hence strongly focussed on security of income. Moreover, there is no obvious catalyst for a recovery in the secondary market. The focus of activity in 2011 will be firmly on the prime end of the market.'