European Capital Markets Bulletin

But the broker said investment activity would have been higher but for a shortage of available property, caused mainly by fewer developments coming onto the market and a mismatch between sellers' and buyers' price expectations. A substantial weight of capital is seeking well-let, income-producing property and is helping to keep yields stable despite falling rental levels across Europe.

Cross-border investment reached €14.4 billion during the half year, accounting for 46% of all deals. The German open-ended funds, which have over €15 billion ($17 billion) to invest, were the most active players. US-managed opportunity funds also have substantial capital to spend on European property, but find it increasingly difficult to achieve ambitious target returns of over 20%.

Tony Horrell, CEO of European Capital Markets at Jones Lang LaSalle said: "Looking forward, we estimate that investors now have of over €100 billion ($113 billion), including debt finance, to spend on commercial property across Europe. In view of the number of transactions in the pipeline, we forecast that the second half of the year will see a higher value of investment than the first. But that 2003 is likely to fall short of 2002's record level of €87.3 billion ($99 billion) by about 10%.