Growth momentum in investment volumes remains positive: DTZ

Investment in commercial real estate across Europe in the third quarter of 2011 reached EUR 25.7 bn, representing a marginal 3% fall from the EUR 26.6 bn in Q2, according to a new research report issued by DTZ.

However, the longer term trend, which accounts for seasonality, showed volumes continue to rise. Volumes over the last four quarters averaged EUR 28.7 bn, and represented the eighth consecutive quarterly increase in this measure.

'We have seen contrasting activity in Europe's three biggest markets,' said Magali Marton, head of DTZ CEMEA Research. 'The UK experienced a 15% decline in activity over the quarter to EUR 7.1 bn. But, both France and Germany registered increases. France registered a 19% increase in volumes to EUR 3.6 bn in Q3. Germany continues to attract capital with quarterly investment reaching EUR 5.6 bn, up 6% quarter-on-quarter.'

Overseas investors returned to the market this quarter as volumes rose EUR 10.5 bn, reflecting a 41% market share, the highest level since 2009. Both inter and intra regional investors were more active. The majority of overseas investment has been focussed on the more transparent and liquid markets especially the UK, France and Germany. Overseas investors continue to increase their market share as domestic investors remained net sellers.

Retail accounted for the largest share of activity in Q3, representing 36% (EUR 9.2 bn) of total volumes. The appetite for retail remained strong as investors take advantage of the flight towards quality assets, dominated by shopping centres and retail parks. In contrast, investment in offices declined by 22% on a quarterly basis to EUR 8.9 bn. Nonetheless the sector still accounts for 35% of total volumes this quarter.

'Looking forward to 2012 we see steady growth in activity with investment volumes set to reach EUR 121 bn, representing an 11% on our estimate for 2011,' added Tony McGough, global head of DTZ Forecasting & Strategy Research. 'As the pace of bank deleveraging starts to increase, particularly towards more secondary assets, we see an increase in product coming to the market supporting increased transactional activity, though this is all predicated on a resolution of Europe's sovereign debt issues.'