European property investment volumes drop 12 percent quarter on quarter, Erste analysis shows

In the second quarter of 2011, real estate transaction volumes in the European investment market declined by 12 percent quarter on quarter to EUR 25 billion, a report put together by Erste shows. Also, in a yearly comparison, the investment turnover is down by 3 percent from EUR 25.7billion in the second quarter of 2010.

The annual prime yield compression continued in the second quarter of 2011, with the cities of Moscow, St. Petersburg, Bucharest and Kiev showing the strongest decline in CEE. Investment volumes in the CEE property investment market reached EUR 6.9 billion by mid-August 2011, which is 20 percent higher than the full-year figure of 2010, accounted for by roughly 120 transactions. The majority of investment turnover continued to be concentrated on the markets Poland and Russia, which account for more than 70 percentt of total CEE investment. The Czech Republic is the third largest market in terms of property investments in the region and already reported volume growth of 50 percent until mid-August compared to the full year 2010 figure. In the office segment, investment turnover amounted to EUR 2.2 billion in the first half of 2011, mainly driven by transactions in Russia and Poland, which accounted for 75 percent of total volume. Even though there is still more than 50 percent of the turnover coming from local investors, cross-border activity is on the rise.