In Q2, the commercial markets of France and the United Kingdom benefit from investor concerns over the eurozone debt crisis.

Commercial real estate investment activity increased significantly in France and the United Kingdom (UK) in the second quarter of 2012 (Q2 2012), compared to both Q1 2012 and Q2 2011, according to global property adviser CBRE, as investors sought the most liquid markets at a time of increased financial uncertainty. Lands end

In the second quarter of 2012, investment turnover in the European commercial real estate market fell to €24 billion, down from €27 billion in the first quarter. Despite rising financial worry in the eurozone, the drop of only 3% quarter-on-quarter highlights the fact that prime real estate is considered as a safe haven in a time of heightened uncertainty.

The activity in Q2 2012 demonstrates a significant shift in national trends compared to those seen in the previous two years. France and the United Kingdom were the biggest beneficiaries, with both markets posting much higher levels of transactions in Q2 2012 compared to both Q1 2012 and Q2 2011. This was partly due to three huge transactions. The London and Paris markets, in particular, are witnessing a lot of office investment transactions.

Real estate investment activity has slowed in markets that had been rising rapidly, such as Germany, the Nordics, and Central and Eastern Europe (CEE). This is especially true when compared to last year, when these three regions were the primary drivers of investment activity. The premium prices attained when such stock comes to market, such as Maximilianhöfe, a prime mixed-use asset in Munich that sold for about €270 million in Q2, demonstrate the strong demand for high quality properties in these regions. The scarcity of prime stock, on the other hand, is stifling investment activity in these areas.

CBRE's Head of EMEA Capital Regions, Jonathan Hull, tells World Property Channel, "While market activity in Germany and the Nordics slowed in Q2 2012 due to a lack of good stock, interest in these markets remains high. Investors are still very sensitive to each market's underlying economics and vulnerability to the eurozone crisis, favoring northern European markets and putting Germany, the Nordics, and the United Kingdom at the top of their wish lists."

Apart from the high market turnover seen toward the end of the year, European investment activity has remained relatively steady over the past two years, ranging between €25 and €27 billion per quarter, with further development hampered by a lack of prime stock and bank funding. As a result, the market is primarily reliant on investors who buy assets with a significant share of equity. Yields in the core markets that attract these investors have remained constant, although smaller and more peripheral markets have seen some upward movement.