The fall was not surprising given the flurry of activity in thefourth quarter as investors rushed to deploy capital before the endof the year, said Magali Marton, DTZ head of continental Europe andMiddle East research. "This seasonal pattern has been a traditionalfeature in the European property investment markets. In fact, theaverage volume over the last four quarters rose by 10%, andunderscores the gradual recovery in Europe's markets."

Around two-thirds of first quarter activity was accounted for bythe big three markets of the UK, Germany and France, with Germanygrabbing a bigger share as activity rose 40% from Q4 to $5.8billion. In contrast, lower volumes in UK and France reflected bothincreased investor caution and a general lack of stock. Elsewherein Europe, the Nordic countries were very dynamic, with an increaseby 64% quarter-on-quarter in the first three 2010 months.

As occupier demand remains weak and uncertainties exist over thesustainability of the economic recovery, a number of investors arebiding their time. "Despite much more optimism demonstrated byinvestors, risk aversion remains evident across Europe; withinvestors concentrating on domestic markets and particularly onprime assets in core markets," Marton added. "With a growing levelof debt due for refinance in the next couple of years, we seeopportunities for those investors with equity to acquireopportunities which to date have not been available in themarket."