Direct commercial real estate transaction volumes in EMEA in Q1 2010 reached 20 billion, according to Jones Lang LaSalle. This was 75% up on Q1 2009 (12 billion) but 15% below the previous quarter Q4 2009 (25 billion). Transaction volumes in the UK at 7.8 billion accounted for over one third of the total and remained at the same level as the previous quarter. The UK was followed by Germany, France and Sweden in terms of quarter one volumes and each recorded an increase in activity compared to the previous year's volumes.
Richard Bloxam, Director, EMEA Capital Markets, Jones Lang LaSalle said: "The first quarter of the year is typically one of the slowest quarters; investors do not have the urgency to press on and close deals as they do towards the end of the year. Typically the first quarter is some 20-30% below the fourth quarter, so we do not read a 15% decrease as a sign of a slowing market. We expect investment activity to increase throughout the year. Already a number of transactions over 100 million and portfolio deals are under offer in the market. We estimate that direct commercial European real estate transaction volumes will reach at least 90 billion for the full year. This will be around 30% higher than 2009."
Nigel Roberts, Chairman of EMEA Research, Jones Lang LaSalle said: "The strengthening investor interest for good quality real estate has clearly been demonstrated by movement in prime office yields which compressed in the majority of the European markets in Q1 2010. London prime yields moved in by 50 basis points and continental European markets between 10-50 basis points with only a handful of markets remaining stable."
Nigel Roberts continued: "Whilst economic recovery still remains fragile, business confidence is generally rising and with improved credit conditions the demand for real estate from core investors is driving down yields. In the short term interest rates still offer positive cash flow opportunities for leveraged buyers but longer term investors will be looking for improving fundaments translating into stronger rental markets."
Source: Source: Jones Lang LaSalle, Property Data, Akershus Eiendom, Athens Economics