CANNES-Record European investment activity in 2006 lays a positive foundation for the months ahead. That was the upshot of this edition of the market analysis CB Richard Ellis holds every year at Mipim.

There was a 46% year-over-year increase in investments, reported Nick Axford, who heads European, Middle East and Asian research for CBRE, bringing the 2006 total to 227 billion euros. Some one-third of that total played out in the UK, which, along with Germany and France, accounted for three quarters of the trades.

Cross-border trading also took a healthy hike in 2006, with 100 billion euros worth of foreign capital pouring into various European countries. Cross-border deals within various European countries increased by 50% while the amount of capital from non-European countries doubled. Australian investors came into the continent in a big way in 2006, with 5 billion euros invested here, Axford said. He indicated that the levels of investment should not see a major change through the rest of the year.

Yields are the problem, he stated, and in the office sector, prime yields are currently below 5%. While the trend is still downward, Axford suggested that in months to come, it might be more segmented by sector than straight across the board. He also suggested that, in comparison to bond markets, the drop is "relatively modest."