Cross-border investment into European real estate by indirect vehicles surged to euro 24.1 billion--considerably higher than the euro 10 ($12.9 billion) to euro 15 billion ($19.4 billion) spent by such vehicles annually since 2000.

Since 1997, when indirect vehicles accounted for a little over 20% of cross-border investment, the European indirect market has undergone a rapid period of development, with new structures and increased investor awareness becoming key features of the market.

"Trends that are likely to become more apparent over the coming year include a wider prevalence of secondary trading and a more general move towards increasing liquidity," says DTZ corporate finance director Christopher Nicolle. " It is also likely that the industry will make further moves towards more open-ended structures, which permit periodic redemptions, in response to increased investor demand."

Direct institutional acquisitions in non-domestic markets fell back to euro 5.5 billion ($7.1billion) for the year, from the euro 6.1 billion ($7.9 billion) recorded in 2003. "This can, in part, be explained by a highly competitive European real estate investment market in which privately financed investors continue to benefit from historically low financing rates. It is also a clear indication of the way in which institutional investors are embracing indirect real estate investment vehicles as the principal means of accessing cross-border real estate assets," Nicolle says.

DTZ estimates that approximately 60% of invested capital in European private property vehicles is attributable to mainstream institutional investors.