Paul Herrington, head of property investment at F&C Asset Management, said: "We are seeing yield compression and ever increasing volumes of investment in a limited number of new projects in the most prestigious locations, such as London's West End, Paris and Madrid.
"As a result, European investors are starting to look increasingly outside those areas, either in the same countries or going further East to Central and Eastern Europe, or even beyond – to Japan, India, China and even Africa.
"Many institutional investors have certainly already recognised the value of diversifying property investments across several European markets and this has led to increasing volumes of cross-border property investment over the past couple of years. The enlargement of the European Union and the improvements made by countries of Eastern Europe in making the regulatory environments more clear, fair and consistent and market data more accurate and comprehensive have all contributed to the creation of a larger level playing field for European property investors."
Herrington concluded: "Property investment is becoming a more global phenomenon with more cross-border deals than ever before. Investors are moving to new areas to find value, such as provincial offices, for example in regional cities in France and second tier towns in the UK. We are seeing heightened interest in new product classes, such as hotels, student housing and car showrooms and investors generally are starting to look more closely at development opportunities both in the UK and abroad."
