European commercial property investment up 44pc

Madrid, Spain Photo: David Hurt

Investment in commercial property across Europe climbed 44 per cent in the first quarter of 2015, as the economic picture improves.

A total of €50.1 billion was invested in European commercial property between January and March, according to Knight Frank's latest report, up 44 per cent from the previous quarter.

The return of investors to the European market has been fuelled by the improving economic sentiment on the continent, as countries such as Spain and Portugal enjoy growth outside of their bailout packages. Even the quantitative easing introduced by the European Central Bank has ensured that conditions have remained favourable for investors: just as property prices in many countries are still low, despite the gradual market improvement, commercial markets in cities such as Madrid are highly attractive.

Building on Ireland and Spain's growth in 2014, activity is now rising in Italy and Portugal, while Knight Frank highlights activity in secondary cities and peripheral markets as proof of growing appetite for risk among investors. Indeed, Q1 2015 marks the busiest first quarter of any year since 2007.

European commercial transaction volumes for 2015 are now projected to pass the €200 billion barrier for the first time since 2007 too.

Office yields decreased in markets such as London, Paris, Munich and Dublin. Compared with the same quarter of 2014, office take-up fell in Paris and London, but improved in markets such as Madrid, Milan, Munich and Warsaw. Rental growth was limited, although prime rental rates rose in Dublin, London, Milan and Stockholm.