Demand rising for 'best commercial property assets' in volatile market

2012 may be a year for investing in long-term opportunities in the European commercial property market, with a new report suggesting overall volumes will hold firm this year, due to the cautious nature of the market.

According to real estate firm Cushman & Wakefield, commercial property investment grew by 17.7 per cent in the final quarter of 2011 to reach €36.8 billion, meaning annual volumes were up 7.8 per cent on the previous year.

However, supply of property is currently running behind demand, with a lack of finance for larger lots also serving to constrict activity levels, to some extent.

Michael Rhydderch, head of Cushman & Wakefield's European capital markets group, said: "It is clear that there is a lot of nervousness out there and sheer uncertainty may hold back dealing volumes this year.

"At the same time, however, the volatility we are seeing in other asset classes as well as the relative level of property yields is serving to stoke up demand for the best assets in defensive markets."

Foreign investment was found to be the main driving force behind the European market last year.

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