Property investors eye riskier markets

 * Q1 European property investment up 26 pct on year
 * UK dominates investment league, then Germany, France
 
 LONDON, April 12 (Reuters) - Property investors are looking
to riskier markets such as Spain and emerging Europe as
competition for safer prime European commercial real estate
pushes up investment volumes and prices, research showed.
 Direct investment in prime European commercial property hit
26.7 billion euros ($38.6 billion) in the first quarter, up 26
percent on the year, research by global real estate consultancy
CB Richard Ellis (CBG.N: Quote, Profile, Research) showed on Tuesday.
 First-quarter deal volumes in the UK, Germany, and France
rose by 18-39 percent. Those in Italy and Central and Eastern
Europe rose by 75 percent and 197 percent respectively, while
those in the Nordics, Benelux, Iberia, Austria, Greece, Ireland
and Switzerland fell by 3-39 percent, CBRE said.
 "As was the trend last year, the vast majority of investor
demand is targeting core assets and markets, which continues to
drive yields further down," CBRE said, noting its all-property
yield index was at 5.5 percent, down 26 basis points from 2010.
 "Investor sentiment is starting to shift further along the
risk curve, albeit very selectively," CBRE said.
 In terms of additional asset risk, markets where economic
and occupier fundamentals were strongest were expected to
benefit most, namely the UK, Germany, France and the Nordics.
 "At the same time, there is also increasing investor
interest in prime properties in what are seen as riskier
markets," CBRE said.
 "These would include Spain, core Central and Eastern Europe
and even first glimpses of interest in fringe CEE markets."
 The growing influence of institutional capital was shaping
up to be one of the key themes this year and would support core
markets, prompting specialist managers to seek more value-add
opportunities this year, CBRE said.
 
 European Commercial Real Estate Investment in Q1, 2011
 Country/Region        Q1 2011        Q1 2010        % Change
                       (bln eur)      (bln eur)
 UK                    9.80           7.03           39 pct
 Germany               5.49           4.65           18 pct
 France                1.99           1.49           33 pct
 Nordics               3.44           3.55           -3 pct
 Benelux               1.22           1.25           -3 pct
 Italy                 1.08           0.62           75 pct
 Iberia                0.75           1.23           -39 pct
 CEE                   2.55           0.86           197 pct
 Other*                0.42           0.51           -17 pct
 All Europe            26.74          21.19          26 pct
 * Includes Austria, Greece, Ireland and Switzerland
 (See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)
 ($1=.6916 Euro)
 (Editing by Erica Billingham)

Property investors eye riskier markets