Retail property development in the UK was the strongest of all European countries, in a year that brought significant expansion compared with the previous 12 months.

A study by real estate and investment management firm Jones Lang LaSalle revealed volumes across the region were up 68% year-on-year, implying retail investment property is returning to healthy demand.

Direct outlays in the sector rose to €20.6 billion (£12.94 billion) in 2010, having stood at €12.3 billion the previous year.

Development property transactions were most active in the three months to December, with the 150 recorded deals representing an 80 per cent leap on the previous quarter, making it the busiest period by far.

UK retail property development made up 31% of activity across all European nations, with Germany's commercial property market the second-most energetic, contributing 23% of the total.

Adrian Peachey, head of UK retail investment at the group, described volumes as encouraging, saying the country dominated when it come to investment property activity, a trend that implies confidence is improving.

"Prime assets continued to be the most coveted, with demand for the best stock typically outstripping supply," he observed, noting: "The key investment trend in the UK was the 'flight to quality' for all retail assets which forced a strong rebound in prices at this end of the market."

Retail investment property was dominated by shopping centres, which accounted for almost half of all money going into the sector, though the trend implies locations away from key urban hubs are likely to be less in demand.

Jeremy Eddy, head of European retail capital markets at Jones Lang LaSalle, confirmed there is "increasing polarisation between prime and secondary", with fears surrounding low consumer confidence and eurozone fiscal weakness fuelling the split.

The company is operational in 60 countries and was involved in the €275 British Land acquisition of Drake Circus shopping centre in Plymouth last month.

Posted by Suzannah Taylor ADNFCR-2842-ID-800346806-ADNFCR