The amount of money spent on European property in the first quarter of this year was down 30% on the previous quarter according to research by Jones Lang LaSalle.
JLL reported an improvement in sentiment despite a continued fall in direct investment in European property to €12bn – which was 70% lower than the same period last year.
In the UK, direct commercial real estate investment in the first quarter was up 4% on the previous quarter, to €4.4bn in the first quarter of this largely due to transactions in the central London market.
JLL said that the ‘core’ western European markets accounted for 95% of the investment, while central and eastern European markets saw little activity.
In Germany €1.6bn was transacted in the quarter, down almost 50% on the previous quarter.
Investment activity in central and eastern Europe including Russia was limited to a handful of transactions in the first quarter which totalled €536m.
Tony Horrell, head of European capital markets at Jones Lang LaSalle, said: ‘In the first quarter of 2009 we have noted improving sentiment and increased bidding; in the last three months we have seen investors seeking high quality and long term good income.
‘However, there is a lack of good prime product and at the same time the accepted definition of the prime asset class has narrowed considerably. Whilst yields in some markets moved out marginally in the last quarter, yields in many markets remained stable, for example in the City of London, Amsterdam, Frankfurt, Hamburg, Munich and Paris. This genuine interest from some investors is a positive sign but only time will tell if key deals will sign in the coming months.’