European commercial property set for revival

INVESTMENT in European commercial property is expected to recover slightly this year to 2002 levels, according to a new report by property agency Jones Lang Lasalle.

JLL predicts that investment will rise 20 to 30 per cent to about 90 million (81m), as availability of debt and more assets coming to market lure reluctant investors out of hiding. Overall investment in 2009 stood at a low of 69.2bn, but more than doubled in the fourth quarter of 2009, reversing declines in seven consecutive quarters.

Chris Staveley, JLL director of EMEA Capital Markets, said: "The growth we are expecting to see this year will be fuelled by an improvement in the availability of debt, the recognition that pricing has probably hit or even passed its floor, slightly more appetite for risk-taking and more assets coming to the market."

The data, published on the eve of Mipim, Europe's largest property trade fair, highlights a revival in confidence among key real estate players.

Staveley said growth figures would "still be a low number in historical terms – roughly 2002 levels" and recovery would be gradual.

"The reason for volumes recording a gradual rather than abrupt recovery will, we think, be the continued focus by investors on a narrow band of core, income producing prime assets," he said.