JLL sees improvement in European direct investment

The strength of economic recovery has fed through into European real estate investment activity, with transaction volumes increasing in the second quarter of 2010, according to Jones Lang LaSalle.

Direct commercial real estate investment in Europe in Q2 2010 totalled EUR 23 bn, marking a 15% increase on Q1 (EUR 20 bn) and 80% up on the corresponding period in 2009, JLL said in its latest European Investment Update.

However, on a half-year basis, 2010 European transaction volumes remained stable at EUR 43 bn, compared to H2 2009. General recovery and improved liquidity for larger lot sizes continues apace and the market continues to see increasing numbers of transactions. Looking ahead to the second half of 2010, Jones Lang LaSalle anticipates that the volumes will increase by 35% and reach the EUR 100 bn mark at the year end.

The UK has led the recovery of both transaction volumes and the pricing correction amongst prime assets, and represented 40% of overall European investment volumes. UK volumes increased by 30% over the quarter and totalled over EUR 9 bn in Q2. Investor sentiment remains positive although it has tailed off slightly, partly due to the perception that prices have risen too sharply against the weak economic and occupational backdrop.

Julian Stocks, head of capital Markets England at Jones Lang LaSalle, said: 'We have seen a strong bounceback in activity and pricing so far this year - especially for prime London. However, in the last few weeks I have noticed a slight change in sentiment and the balance between buyers and sellers has altered. I expect yields movement to be minimal for the next few months and turnover in England to be similar to 2009.'