EUROPE - European real estate values continued to show improvement during the third quarter, particularly in core western Europe, according to CB Richard Ellis (CBRE).

CBRE's latest European Evaluation Monitor report found that prime yields have continued to fall across the continent since the European market posted its first positive quarterly movement in the second quarter, with a strong performance of prime assets in core markets.

All the regions covered by CBRE posted positive figures in the third quarter, with the exception of Greece, Portugal and Ireland.

There were also weak results for offices in the Netherlands, while positive changes were reported in Spain and Italy.

There was no upturn in Germany in the third quarter, but a number of recent transactions in the country are expected to translate into a positive change in the fourth quarter, CBRE said.

Retail was Europe's best performing sector, which it had been for the four previous quarters, significantly outperforming other sectors since Q4 2007.
The strongest performing market region over the quarter was the UK, which recorded capital growth of 1%.

France led the non-UK markets with 0.8% growth, followed by central and eastern Europe (CEE), which was driven by a strong performance by Poland.
Andrew Barber, senior director of international investment valuation at CBRE, said: "We continue to witness increased polarisation between prime and secondary assets.

"Investor demand for prime product continues to drive yields down in much of core western Europe, but notably in France and Germany.

"We are seeing renewed interest in the Nordics - especially Sweden - and in CEE, albeit much of the focus remains on Poland, leading to capital growth in these markets, driven mainly by yield compression."

The CBRE European Valuation Monitor is based on quarterly fund valuations carried out by CBRE and designed to enhance transparency by providing a general indication of patterns of value change in the European property market.

This is the fourth report in the series since it was launched in Q4 2009.