There are clearer signs of recovery across Europe, as investment volumes increased for the third consecutive quarter in Q4 2009 to 20.6 billion, representing a 26% increase on the 16.4 billion ecorded in Q3, according to DTZ's European Quarterly report, published this week.
Magali Marton, Head of Continental Europe and Middle East Research commented: "In Q4 2009 we saw a more broad-based recovery in investment volumes with France, Italy, the Nordics and CEE posting significant increases in investment activity. This growth was supported by an increase in the number and value of large scale deals. In contrast, the region's largest markets, the UK and Germany, posted a modest fall in volumes over the quarter."
France recorded a 145% increase, from 1.6 bln. in Q3 to 3.9 bln. in Q4, as a growing number of investors targeted the market, reflecting the perceived value in the French market. Italy, the Nordics and CEE also witnessed significant growth, albeit from a low level, with volumes rising 432%, 113% and 215% in Q4 2009 respectively. In contrast, volumes in two of the largest markets, UK and Germany, were lower in Q4, as UK volumes fell by a moderate 7%, from 7.4 bln. to 6.9 bln. and by 3% in Germany, from 3.2 bln. to 3.1 bln.
Over the quarter, risk aversion remained evident across Europe. Magali Marton said: "In Q4 2009, investors retreated further to their home markets, with foreign investment accounting for 31% of total activity, compared to 35% in Q3. Since the peak of the market, the proportion of foreign purchases has slipped, from 52% in 2007 to 45% in 2008 and 34% in 2009. This indicates that investors still prefer to seek opportunities in the markets they know best."
Magali Marton added: "We expect the recovery in Europe's commercial real estate market to continue and based on our research from the 'Great Wall of Money', we estimate that there will be 106 billion of capital available in 2010. If all newly available capital were spent on investment opportunities, European investment volumes would increase by an astounding 80% over the coming year."
The majority of capital has been raised by third-party managed funds (72%) and institutions (17%) with the remainder largely from German funds, sovereign wealth funds and quoted companies. Most investors are targeting a range of countries and sectors providing investment managers with a level of flexibility in where they choose to deploy the capital, concludes the DTZ European Quarterly research.