Investors will continue to plough their money into European commercial property over the course of 2012, BNP Paribas Real Estate has predicted. In the firm's At a Glance Main Investment Markets in Western Europe report for the final quarter of 2011, it revealed the volume of transactions in the commercial real estate investment market climbed by seven per cent last year, in comparison with 2010. The organisation asserted demand for such assets "should remain strong", and highlighted the expectation that some institutional investors will increase their exposure to property markets during 2012.
However, BNP Paribas Real Estate pointed to a growing gap between economies in the south of the continent and those in the north. "The outlook for southern European countries looks pessimistic, whereas the UK and Germany remain confident about 2012 with volumes forecast to stabilise," the study stated. Indeed, central London topped the table with the greatest level of investment in property during 2011, followed by central Paris, Frankfurt, Munich and Berlin. There was, however, a significant discrepancy between the data recorded for London and Paris and cities elsewhere in Europe. In the UK's capital, 13.558 billion euros (GBP 11.348 billion) was invested, while in Paris the figure stood at 11.062 billion euros. In comparison, Frankfurt saw just 2.967 million euros ploughed into its commercial real estate sector.
In terms of the type of commercial property investors are likely to target, offices are the most popular, with this asset class taking a 70 per cent share of all transactions in 2011. There is a more even split between office and retail premises in certain markets, though, such as in Berlin, where 46 per cent of the total investment in the final quarter of 2011 went to offices, while retail accounted for 48 per cent. Jones Lang LaSalle recently highlighted the falling vacancy rates in European offices, noting they have now dropped below ten per cent for the first time since the third quarter of 2009. A lack of new space coming on to the market, combined with higher-than-expected leasing volumes in the three months from October to December 2011, have helped limit supply, the firm commented.