Munich, October 9th 2007 – Sentiment expressed at CB Richard Ellis Group, Inc.’s annual European Investor Conference reflected the growing appetite for cross border real estate. Over 70% of the leading European investors in attendance stated that their cross-border activity increased in 2007.

These investor views are consistent with market analysis from CB Richard Ellis’ first half (H1) 2007 European Investment Report. Released today, the report states that 57% of all transactions (by value) in H1 2007 involved foreign buyers, compared with 47% in H1 2006. Central and Eastern European markets continued to be almost completely dominated by foreign capital, and Western Europe saw the highest proportions of foreign investment in Finland, Germany, France and the Netherlands, accounting for more than 70% of total transaction value in each country.

Historically, the size and liquidity of the U.K. market has resulted in it attracting the most cross border capital. In the first half of 2007, however, the €15.5 billion invested into the U.K. was marginally exceeded by the €16.5 billion that flowed into Germany.

Despite the weakness of the U.S. dollar, buyers from the U.S. were by far the most active cross-border buyers in H1 2007, accounting for €21.5 billion of acquisitions in Europe compared to just €13.9 billion in H1 2006. In addition, U.K. investors continued to increase in importance, accounting for €11.5 billion of acquisitions outside the U.K. compared to €6.5 billion for the same period in 2006.

Also notable was the return to the European market of German investors, particularly the Open-Ended Funds (GOEFs). The GOEFs purchased €3.9 billion of property outside Germany in H1 2007, a trend that is expected to accelerate. Nick Axford, Executive Director of EMEA Research & Consulting said: “Higher lending margins and lower Loan-to-Value ratios (LTVs) are changing the balance of the investment market. Buyers who tend to use a higher proportion of equity, such as U.K. institutional investors, German Open-Ended Funds or capital coming from the Middle East, will undoubtedly become more competitive.”

The other major trend highlighted by the H1 2007 report is the increasing amount of owner-occupied property that is being sold to investors. This totaled nearly €24 billion in H1 2007, compared with €16.5 billion in H1 2006. Sales by owner-occupiers are now a significant part of the overall market, and accounted for more than 20% of all transactions in Sweden, Portugal, Ireland, Belgium, Greece, France, Italy, Spain and the U.K. It is possible that the tighter lending environment could further accelerate this trend. If corporate borrowing becomes more expensive, it is likely to become increasingly more attractive for corporations to raise capital by selling real estate.

Total investment activity in H1 2007 grew to €119 billion, a 17% increase compared with the first half of last year. The biggest increase in activity was in Germany – in line with the trend in 2006 – but there were increases in turnover in most of the major markets.

The fastest growing markets, however, were Romania and Bulgaria, which both joined the EU at the beginning of the year. This parallels similar jumps in the level of investment seen in Poland and the Czech Republic in 2004 when they too joined the EU. Also in line with the experience in Poland and the Czech Republic, growth in Romania and Bulgaria is being driven by the retail sector, with forward purchases of shopping centres occurring across those countries (not just in the capital cities of Bucharest and Sofia).

Jonathan Hull, Executive Director of EMEA Investment, said: “The credit squeeze, which started to materialize early in the second half of the year, is having an impact in some areas, particularly on larger transactions where securitised debt is of greater importance. We continue to see strong capital flows across the European markets, particularly in the €50 - €100 million range where the debt is more readily available. It is likely that equity driven investors will have a greater role in the market going forward and, we’ve seen increasing amounts of equity based capital targeting key European markets in recent months.”