LONDON, April 15 (Reuters) - European commercial real estate investment volumes fell to 11.5 billion euros ($15.2 billion) in the first three months of 2009, a 44 percent fall on transactions struck in the final quarter last year, data showed.
The world's largest real estate consultant, CB Richard Ellis said European property buyers were still reeling from the effects of the credit crunch and the collapse of U.S. investment bank Lehman Brothers, which sent shockwaves through global mortgage markets.
"The reduction in completed property deals in Q1 2009 reflects investors' lack of confidence in the last quarter of 2008 and the longer lead times now being experienced when completing real estate transactions," said Michael Haddock, Director of Capital Markets Research for CB Richard Ellis.
Just six of the 26 European countries covered by CBRE showed an increase in investment activity in the first quarter. These were Belgium, Luxembourg, Norway, Romania, Slovakia and Ukraine.
Despite the sharp fall in overall activity, a slowing rate of decline in Britain -- the market broadly seen as on the frontline of a correction in European real estate pricing -- suggests sentiment may be starting to improve, CBRE said.
UK transaction volumes dropped 22 percent in the first quarter but its share of the European market increased to 37 percent in Q1 2009, up from 26 percent in Q4 2008.
CBRE said the effect of Lehman's collapse was magnified in Europe after the German government moved to prevent a possible bank run by guaranteeing 100 percent of bank deposit accounts, sparking a rush of redemptions in several German open-ended real estate funds.
As these funds were some of the most active buyers of European real estate at the time, and their withdrawal from the market further undermined investor confidence and removed a key source of demand which had helped to support prices. (Reporting by Sinead Cruise; Editing by Rupert Winchester) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)