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Direct investment in commercial real estate in Europe stood at EUR 24 bn in the first half of 2009, with the volume in the second quarter similar to that in the first, according to new research from Jones Lang LaSalle.

But the EUR 24 bn transacted in direct commercial real estate investment in the first half of this year was down 42% on the second half of 2008 (EUR 41.5 bn).

Tony Horrell, head of European Capital Markets at Jones Lang LaSalle said: 'We believe that the European market has now reached a floor in transaction volumes and based upon investor interest we would expect an increase in turnover in the second half of this year. Prime office yields were largely stable in Q2 for the first time since mid 2007. Volumes have remained low because the bid offer spread remains wide in some markets due to price expectations and needs of owners.

'At the same time falls in capital values have made pricing attractive for those investors with equity or buyers who are not highly leveraged and who have good banking relationships.'

He said high net worth individuals and equity players were making the market at the moment, as the debt markets remain largely restricted; new lending remains tightly constrained and expensive and most large deals have vendor financing or stapled debt. 'There is no shortage of equity for income secure opportunities. We are seeing deep investor interest in London, with multiple bidding from international investors, some of whom continue to benefit from currency advantage, ' Horrell said.

Nigel Roberts, chairman of European Research at Jones Lang LaSalle added: 'The UK remains the largest market in Europe, accounting for 35% (approximately EUR 8 bn) of total European volumes, whilst Germany accounted for approximately EUR 3.4 bn. Major Western European markets were marginally up in the second quarter compared to the first, albeit from a low base, including France, Spain and Italy, as attractive investment opportunities - often assets which rarely come to the market - have appeared.'