Strict lockdown measures across Europe were eased in the third quarter of the year, but that didn’t do much for commercial real estate investment volumes. And things could be about to get worse.

Q3 European investment volumes were €44B (£40B), data from Real Capital Analytics showed, down 43% on the same period last year and below the €50B that traded in the second quarter, when lockdowns were at their strictest.

RCA data also showed that a new wave of lockdowns could further depress investment volumes. There was an average lag of six weeks between restrictions being tightened to their maximum level earlier this year and transaction volumes reaching a trough, RCA said in its Capital Trends Europe report.

As a result, Q4, a period which in the past five years has accounted for a third of all investment volumes in Europe, could be a non-event. RCA caveated this by saying that as coronavirus infections have risen across Europe, governments have been loath to introduce full national lockdowns of the sort seen earlier this year.

The UK actually performed better than markets that have been perceived by investors to be more liquid, like Germany. Germany had a higher absolute investment volume, with €9.7B traded compared to €9.5B in the UK. But the German total represented a 47% drop on Q3 2019, compared to a drop of “just” 30% in the UK. RCA said regional investment had improved in the UK in Q3 and boosted the figures.

Two quarters on from the explosion of the coronavirus pandemic in Europe, a clear hierarchy of investor demand has emerged, RCA said. Industrial, especially logistics assets, apartments and grocery stores sit at the top table; in the middle are offices, where worries over rising vacancy and falling rents seem to be holding back some investors; and down at the bottom are hotels and large swathes of the retail sector.