LONDON, June 4 (Reuters) - Investment in European commercial property fell sharply in the first quarter but there are signs of more investor interest, particularly in Britain, Cushman & Wakefield said.
The volume of investment property sold January-March fell 74 percent to 11.4 billion euros ($16 billion) from the 2008 period, driving average prices 18.5 percent lower over the 12 months, the property services firm said on Thursday.
But some markets are now reporting renewed interest.
"There has been an increase in risk tolerance among investors and, alongside signs that we may soon be past the worst in the economy, this bodes well for increased activity in the property sector," Cushman's head of European research David Hutchings said.
Central and eastern European markets were the worst hit during the first quarter, after fears of economic collapse drove property yields -- which moves inversely to prices -- up by 66-100 basis points (bps) over the period.
The downturn was milder in western Europe, where property yields widened 18 bps, easing from the 30 bps rise seen in the final three months of 2008, Cushman said. The spectre of economic recession caused rents across the region to plunge, with first quarter rents falling on an annualised basis by 52 percent in eastern Europe, 14.4 percent in central Europe, 15.2 percent in Britain, and 6.2 percent in the rest of western Europe, it said.
"Yields look to have further to rise in many parts of Europe before we can declare the market offers great value ... but with an acceleration in the rate at which rents are adjusting, we are certainly drawing nearer to that point," Michael Rhydderch, Cushman's head of European cross border capital market, said. (Reporting by Daryl Loo; Editing by Dan Lalor) ($1 0= 0.7050 euro) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)