EUROPE – Interest in European commercial property reached record levels last year and is expected to remain strong throughout 2001, according to a report by property adviser DTZ.

The report shows that investment transaction volume was at least as strong in all European countries as in 1999 and reached record volumes in some of them.
The adviser believes that the real estate market should remain strong in Europe, despite a predicted US economic downturn.

“ The broad pattern of constrained development activity over recent years should help to cushion the real estate sector from any adverse effects arising from slowing demand,” says John Rigg, director of DTZ EuroInvest.
“ For the foreseeable future, property markets should generally remain far less exposed than was the case in the last cycle. Indeed, the property sector appears to be a relatively safe haven in an overall investment context of increased volatility.”

The exceptionally strong rental growth that has been seen in European cities, such as Madrid, Paris and the West End of London is not likely to continue, says the adviser, yet it expects the rate of growth to be in excess of inflation in the future. The imbalance in the supply and demand of office space will also continue, but it will not be as drastic as it has been recently.

John Forrester, head of business space at DTZ, says: “ The dynamics of the leading European markets remains strong with low levels of supply. The very high-recorded levels of demand are unlikely to continue, but even a substantial fall away in occupier take up will leave under-supplied markets for the time being.”