Paris and London lead European property rally

EUROPEAN property and investment markets are making small improvements, according to two fresh international surveys, with Paris and London continuing to lead the subdued rallies.

And the Irish commercial investment market is up 41% for the half-year, at €115 million, compared to the same 2009 period.

A survey of 55 European locations by CB Richard Ellis found that office rents are inching back up and prime rents and yields are “broadly stable”.

However, the report said that “it will require clearer signs of economic recovery for rental increases to become more widespread.

Investors remain focused on core prime properties, as reflected in downward movements in prime yields across locations,” according to research director Richard Holberton.

In a separate survey, Jones Lang La Sales second-quarter results show “the strength of economic recovery has fed through into European real estate investment activity, with transaction volumes increasing in the second quarter 2010.”

While half-year direct commercial investment figures remain stable at €43 billion compared to 2009, this year’s second quarter figures are up 15% on the first quarter of 2010, or up 80% on the very low second quarter 2009 levels.

JLS forecasts volumes will reach €100bn for the full 2010 year, up 35%.

Irish investment turnover had a quarterly rise of 21.5% in the second quarter of 2010, with €63.1m invested, according to JLS researcher Clare Eriksson.

She said the deals were by either private Irish or overseas investors, not by institutions.

Ten of the 12 Irish investment deals completed in 2010 were for retail property, primarily high street bank branches, while two significant office sales represented 54% of value, at €52m.

“These statistics reflect a weak rebound in Irish retail investment activity in the first six months of 2010, as was the case in 2009,” said Ms Eriksson.

Investment turnover in the Irish market by year’s end is forecast to be up on 2009 levels, at about €250m, or more than double that, about €550m if Grosvenor Estates completes the sale of the Liffey Valley Shopping Centre.

Annual activity levels had reached €1bn averages in recent years.