Elsewhere: British Investors Look for Fresh Opportunities in Mainland Europe

And as investors learnt more about the sector, some dipped their toes into commercial property for the first time. Small offices and pubs were bought up at auctions or in private deals by newcomers.

According to the Royal Institution of Chartered Surveyors, the share of investment by private individuals in factories and offices has increased from 2 per cent to 10 per cent since 2000.

Private investors and syndicates put a net ?2.33bn into UK property last year, according to Property Data 2004.

But property in Britain is no longer cheap. Anyone who has ever suffered a typical home counties dinner party knows that house prices have increased substantially.

The subsequent upturn in the price of commercial property is of less interest to the man in the street.

Yet prices leapt last year, partly because of interest from fund managers and wealthy buyers, often from abroad.

This raises the question: where next? Mainland Europe appears an obvious choice. Some banks and agents are reporting a growing Euro-curiosity among investors.

"Many of our private clients are now looking towards Europe," says Paul Stevens, an expert in structured property finance from Investec, the bank.

"What we were doing in the UK two or three years ago, where private clients do leveraged deals, they are now looking at Europe because we have the same funding structure we had in the UK two years ago with a yield gap [the difference between income and debt repayment] of 4 per cent or so."

The yield gap exists for two reasons. Borrowing is much cheaper in Europe than in the UK. More attractive yields can be found on properties, too.

However, homework is essential. Markets differ by sector and by location. Prices in retail property have risen sharply in the past three years, buoyed by rental growth. The office market, however, has seen falls in rents in the same period, meaning a slower growth in capital values. The third sector, industrial, has been more stable.

Within each of these areas there are marked contrasts from one place to another. Take Moscow, where occupancy rose to a record high last year, pushing up rents. Or there is Germany, where office markets remain weak and take-up is still 40 per cent below its 2000 peak, according to agent Jones Lang LaSalle.

Some investors might decide to buy into Germany now on the basis that matters are unlikely to get any worse.

Others may choose to follow the money into sectors that are already hot.

Either way, detailed research is essential for anyone considering investing overseas - not least because regulatory regimes, taxation and legal systems might not be quite what investors are used at home.

"Clearly you have to be careful, there is often a yield gap but there are some inherent risks," says Mr Stevens.

"For example, in the UK the landlord is not liable for insuring and repairing property; in Switzerland he is."

Also, British property tends to have longer leases, which provide greater security and predictability - although these are becoming shorter every year.

Robert Porter, a partner at law firm Allen & Overy, says that in France there is a 3 per cent tax on funds that contain money from offshore havens. As a result, funds that set up there must split themselves into different parts depending on the status of investors.

However, while Britain currently has the advantage for landlords of upward-only rent reviews - where rents cannot be negotiated downwards during the course of a lease - the government might soon legislate against this.

British property giants - the listed companies, private companies and institutions - have shied away from Europe in recent years. Some made forays into the continent in the late 1980s but most, with the exceptions of Heron and a few others, did not stay long.

So says Tony Edgley, managing director of corporate finance, at Jones Lang LaSalle. During the 1990s, they found more exciting opportunities in the UK, where property has been "going like a train", he says.

An increasing number of institutions, such as Standard Life, Scottish Widows, Schroders and Prudential are increasingly turning to Europe for opportunities.

"I think from a risk perspective the institutions and property companies and private funds are right to afford themselves the risk diversification that follows from ownership on a pan-European portfolio," says Mr Edgley.

Ownership of commercial property in a different country is far from easy for a private investor, unless he or she has considerable wealth. Several firms cater specifically for high net worth individuals, for instance Citigroup or Strategic Real Estate Advisers.

However, the number of syndicates of private investors is growing. And some firms are setting up new devices for individuals to get exposure to the market.

For example, Euro Property Prospects, which last year opened a general European property fund, has just launched another to allow investors with a minimum of ?30,000 to invest in Croatia and Slovenia.

Jones Lang LaSalle has launched a product that it believes could be widely followed. It is a feeder fund, set up as a UK limited partnership, into which private investors can put between ?25,000 and ?50,000.

Seven institutions have put in 250 million euros while another 30 million euros has been invested on behalf of Jones Lang's private investors.

The vehicle, an illiquid closed-end unit, is buying industrial buildings in France, the Netherlands and Germany. "There is a racing certainty that we could have raised a lot more than we did. We were deluged with inquiries," says Mr Edgley.

"That would suggest that UK private investors are interested in going into continental Europe."