The Euro-zone economy expanded by +0.2% in Q1, having stagnated in Q4 2009, however GDP growth is predicted to fall in the second half of 2010, according to Capital Economics.

Commercial property investment fell during Q1 2010, as increases in retail investment volumes were unable to combat the drops in both the office and industrial sectors.

The report stated: ‘A fall in Q1 is not unusual. In any event, the underlying trend in investment volumes continued to rise, albeit only modestly. At the sector level, retail investment volumes, boosted by sales of shopping centres, bucked the weaker trend seen in office and industrial markets. This pushed the retail sector’s share of total investment transactions up to 50% in Q1.’

Investment volumes fell throughout the Euro-zone, with France seeing a particularly steep drop which was attributed to a lack of prime product. Germany however was the main exception as investment market momentum which was built up in Q4 was extended as it saw a small increase in Q1.

Take-up in the office market fell in the majority of Euro-zone markets in Q1, particularly in Milan, Madrid, Amsterdam and Brussels, although in the case of Brussels, the fall followed an exceptionally strong Q4 in 2009. Occupier activity in Dublin increased by more than +20% on the previous quarter, however this was from an exceptionally low base.

Vacancy rates in Paris and Helsinki began to fall as pressure from new developments eased, whilst in Madrid, Barcelona, Amsterdam and Lisbon, vacancy rates rose.