Real estate investment in Europe rocketed in the first half of 2006, up 30% on the same period last year.

Real estate investment in Europe rocketed in the first half of 2006, up 30% on the same period last year.

Volumes of investment reached a record €95bn (£64bn) compared to €156bn (£105bn) for the whole of 2005, according to Jones Lang LaSalle's latest European Capital Markets Bulletin.

Hotel investment saw the biggest rise in total volumes from 3% to 12% in the first half of 2006.

The UK remains the most traded country at 36% in the first half of 2006, although its share is down from 45% in 2005.

Tony Horrell, CEO of European Capital Markets at Jones Lang Lasalle said: ‘High levels of investor demand and a number of major portfolio deals pushed European direct investment volumes to new heights; activity in the first half of 2006 alone was above full-year levels seen in 2000-3.

‘Germany continues to be a focus for investors in Europe, with the largest share of cross border transactions ahead of the UK and France, and has overtaken France to take second place after the UK in terms of share of total transactions.’

Looking ahead to the rest of the year Horrell said: ‘We expect the strong levels of investor demand to be maintained in the second half, pushing transaction volumes up towards the range €180-200bn (£121-134bn) by the end of the year. With the introduction of REITs in the UK in 2007 we expect to see a number of transactions, as companies converting rebalance their portfolios, or possibly split them into stabilised, income-producing "REITable" assets.’