Germany and CEE are the most attractive regions In Europe for making investment purchases in 2011

“Germany has just overtaken the UK as the most attractive investment destination according to CBRE’s European Investor Intentions Survey, 2011. In regional comparison, the CEE finished third after Western-Europe and Asia. France and the CEE recorded positive annual value change.” – was announced at CB Richard Ellis’ (CBRE) 5th annual Property Investment Breakfast.

According to Q1 2011 European Valuation Monitor value growth remains positive but gradual, reflecting an absence of strong movements in either rents or yields this quarter.

Nearly 400 investors were questioned in CBRE’s annual European Investor Intentions Survey 2011. According to their impression Western Europe is still the most attractive region for making investment purchases this year. Germany, the CEE region – especially the Polish market-  Nordics and Spain have become more competitive in 2011,  while the United Kingdom and France attract fewer investors than a year before. When comparing the sectors, shopping centres and high street retail properties seem to be more competitive for the investors in 2011, although office sector keeps to be the most attractive for them.

“Regarding the investment transactions recorded in Q1 2011, the Nordic region continues to report the third highest level of activity behind the UK and Germany and has just overtaken the UK as the best annual and quarterly performer”. France, Germany and the CEE also recorded positive annual value change, and Southern Europe & Ireland was flat – supported mainly by Spain and Italy.” – Tim O’ Sullivan, Head of Capital Markets of CBRE Budapest stated.

European commercial property values continued to increase in the first quarter (Q1) of 2011 ( 0.4%), but at a slower rate than seen in Q4 2010 ( 1.2%), according to CB Richard Ellis’ (CBRE) Q1 2011 European Valuation Monitor. This slower rate is consistent with recent changes in prime yields in Q1, where falls of 10bps or less were recorded across the office, retail and industrial sectors; with the overriding picture being one of stability.

Simon Threlfall, Associate Director of CBRE EMEA, said: “Value growth remains positive but gradual, reflecting an absence of strong movements in either rents or yields this quarter.  It is also notable that the composition of value growth is shifting – in the early stages of recovery the EVM (European Value Monitor) was mainly driven by UK growth, and year-on-year change in the excluding-UK component was negative as recently as Q3 last year.  Evidence from Q1 of this year shows that the difference is now narrowing as excluding-UK performance improves.

Having fallen the furthest in the downturn, retail values led the way in the European commercial property recovery and have again recorded the strongest growth this quarter ( 0.8%). This corresponds with the investment volumes recorded in Q1 2011 – where retail claimed a 46% share of the €26.7 billion total commercial real estate transacted, which is well above trend. The strongest retail capital growth was recorded in France ( 1.4%), but values improved in all markets. It is notable that as investors have begun to shift along the risk spectrum, the reported upturn in demand in riskier markets such as Spain and core CEE has already started to benefit retail capital values. Industrial values are lagging, and are still virtually unchanged from mid 2009.

For Editors: CBRE’s European Valuation Monitor is published quarterly. The figures reported in this document are based on regular valuations of standing-investment portfolios carried out by CB Richard Ellis’ international and national valuation teams in Europe.