Credit crunch across Europe

THE full force of the credit crunch is now being felt by the European commercial property market, according to new research released by Cushman & Wakefield.

Investment volumes in the first three months of the year fell 37 per cent on the same period in 2007, while yields rose at their fastest since 1992. In the UK, volumes fell 52 pc over the same period. With confidence shaken and uncertainty over pricing impacting almost as

much as the lack of affordable debt, the market is ready for more to come, it warns.

To date, however, the occupational side of the market has held firm, with prime rents rising 11 pc in the year to March. As a result, total returns have remained in positive territory, with an all-sector prime average of 7.1 pc for Western Europe.

The question is whether such performance can be sustained during a period of job cuts, tighter borrowing, increased risk-aversion and the threat of stronger inflation.