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Investment in European real estate fell 52% to $178 bn (EUR 138 bn) last year, but the region remained the most popular destination for property buyers, according to new figures from Cushman & Wakefield. Europe accounted for 41% of all commercial property transactions in 2008. Asia came in second place (30%).

The report indicates that global investment volumes fell 59% in 2008 to $435 bn, down from 2007's record total of $1.050 bn. This was the lowest annual total since 2004 with a significant decline in investment from foreign investors. Figures in international property adviser Cushman & Wakefield’s Investment Atlas 2009 also predict that volumes will fall again this year, albeit marginally, to around $412 bn.

Cushman & Wakefield said North America reported the largest fall in 2008 with a 73% drop in investment from $437 bn to $116 bn. As a result of this massive decline, North America ceded its position as the top global investment target in 2007 and fell to third place in 2008 behind Europe and Asia.

Investment activity in Asia declined 45% to $131 bn (down from $237 bn). Latin America proved to be the most resilient market with investment falling by only 9% to $8.9 bn (down from $9.8 bn).

At a country level the US accounted for 25% of all global investment at $107.1 bn. China, for the first time, overtook the UK as the second most popular destination with $50.3 bn or 12% of global investment. The UK accounted for 9% or $37.1bn of investment with Japan and Germany each accounting for around 7%, or $29.3 bn and $28.8 bn respectively.

David Hutchings, head of research, Cushman & Wakefield EMEA, said: 'Although virtually all global markets had a decline in investment it's been the mature markets which have suffered most. Emerging markets now account for 22% of global investment when as recently as 2006 they only accounted for 9%.'

China is by far the most dominant of these markets but Russia, India and Brazil all increased their share of investment coming in at 15th, 16th and 20th overall.

'It is clear that pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income that could be produced and sustained. It is equally true, however, that pricing may now be becoming too conservative in some markets, again ignoring the fundamental potential of the underlying market,' Hutchings said.