European commercial real estate transactions down

Commercial real estate transactions in Europe are down an average of 60% from this time last year with only Russia, Sweden and the Netherlands seeing an increase in volumes.

Volumes were significantly down in the UK, Ireland, Norway and Germany, according to the Jones Lang LaSalle Global Capital Markets update.

However although UK volumes slowed by 29% it was still the most active European market with €5.7 billion of direct transaction and along with Germany, which was down 9% to €3.2 billion, the UK accounted for over a third of European investment transactions.

But the property market is so fragile at present that analysts are not yet giving predictions for 2009. 'We are expecting direct real estate investment volumes in Europe to reach close to €115 billion in 2008, but are yet to issue guidance on 2009 and beyond, other than to say we foresee opportunities aplenty for a wide spectrum of investors if they can avoid or insulate themselves sufficiently from the very real problems of refinancing, distress, and falling values that will afflict many investors and be a feature of the next 18 months at least,' said Tony Horrell, head of European capital markets.

'The de-leveraging of the market which will inevitably take place against the background of falling prices in the majority of markets will provide opportunities for equity buyers. Whilst an increasing number of opportunity funds have been launched purchases will predominantly be equity driven. While debt is available for smaller higher quality deals, demand-led transaction volumes are likely to remain relatively low,' he added.

Between regions Middle Eastern and German open-ended funds were very active outside of their home region. German funds took the gold medal in international commercial property investment in H1 2008, accounting for 14% of total cross-border purchases.

However, backed by soaring energy prices, Gulf Cooperation Council (GCC) countries are increasingly confirming their status as major purchasers of global real estate, the report confirmed, especially in the depressed US and UK markets.