Direct investment in European retail real estate reached EUR 4.9 bn during the second quarter of 2011, with Russia and Poland showing significant activity, new research from Jones Lang LaSalle shows. Total investment volumes for the year to date now stand at EUR 13.6 bn, up 34% on the same period last year.

Most investment activity remained focused on the UK and Germany, accounting for 56% of total volumes over the quarter, while transactions in Sweden totalled EUR 572 mln as the region continued to attract significant interest. Sweden has already surpassed transaction levels for the whole of 2010, exceeding EUR 896 mln in the first half of this year alone.

In Eastern Europe, the level of activity in Russia (EUR 432 mln) and Poland (EUR 332 mln) was boosted by key transactions, most notably the EUR 278 mln purchase of Gorbushkin Dvor and Filion Shopping Centre in Moscow by MTZ Rubin and the EUR 171 mln sale of Promenada Shopping Centre, Warsaw by Carpathian.

Jeremy Eddy, head of EMEA Retail Capital Markets at Jones Lang LaSalle commented: 'Current investor demand remains focused on the core European markets of France and Germany but we also expect Poland and CEE to witness significant investment volumes by the year end. Investors driven by higher returns are focusing on the growth markets of Russia and Turkey which provide prospects for rental and turnover growth as well as potential for yield compression.'