Average commercial prime yields across Europe now stand at 7.52%, with Western yields (excluding the UK) averaging 6.65%, according to new research from Cushman & Wakefield (C&W).

This compares to average yields of 6.97% in the UK, 8.63% in Central Europe and 12.86% in Eastern markets.

As a result, the yield differential between west and east has widened to 6.21% versus 4.23% a year ago. Despite the opening of this yield differential, investor activity in Eastern markets remains very subdued, according to C&W. Across the sectors, investors are still very much focused on core Western markets with demand most evident in markets such as the UK which have seen the most extensive pricing corrections.

This is not a universal trend, however, and is not yet evident in Spain and many of the Nordic markets for example, where, despite a greater than average shift in yields, increased interest over recent months has yet to translate into deals, as investors await evidence that pricing is set to stabilise.

Investment volumes in the second quarter rose 2.5% on the first three months of the year, driven by increased activity by foreign buyers (up nearly +16%), in core Western markets. At € 11.97bn, volumes were nonetheless just 41% of the average for 2008 and only 19% of the average for the market’s peak year in 2007.