During 2003, property investment activity across Europe once again defied weak occupational markets in the office sector, with international investors remaining particularly active.
Whilst the European economic recovery began to gather pace towards the end of the year, vacancy rates have continued to rise and rents are still falling in the face of relatively weak occupier demand. Across the major European markets, a total of €82.4 billion of investment property was transacted, around 42% of which was acquired by overseas purchasers.
German capital, particularly from the open-ended funds, continued to dominate the market during 2003 in a pattern that has become familiar in recent years. Debt financed purchasers were also highly active, seeking to take advantage of the low interest rates prevailing across the continent. Coupled with a shortage of high quality product, this investmentdemand has supported capital values at levels above those which might be expected, given the weakness in the underlying occupier markets.
Source: CB Richard Ellis