RETAIL SECTOR DOMINATES EUROPEAN PROPERTY INVESTMENT MARKET WITH RECORD 42% SHARE IN Q1 2010
Investment in European retail real estate reached €8 billion in the first quarter (Q1) of 2010, outpacing office investment activity with a record-high 42% share of total commercial real estate turnover, according to the latest research from CB Richard Ellis (CBRE). In stark contrast to the performance of the overall commercial real estate investment market, which saw a 32% quarterly decline in Q1, retail activity was only slightly below the €8.1 billion reported in Q4 2009.
Germany, Iberia and Norway saw the fastest growth in overall activity, with retail’s share of Q1 investment well above 50% in all three markets. With €2.7 billion transacted, the resurgence in German retail investment was particularly strong – Q1 saw a threefold increase on the 2009 quarterly average turnover of €870 million. With a 33% share of the total, Germany became Europe’s largest market for retail investment in Q1 2010, outpacing the UK where only €2.1 billion was transacted.
The increase in retail investment activity across Europe reflects the growing number of larger lot size transactions completed in Q1 2010. Whilst Corio’s purchase of mostly German shopping centre portfolio has been the only €1 billion-plus transaction this year to date, there was a reported increase in €200 million-plus deals that changed hands compared to the previous quarter, especially in the shopping centre sector. This is partly influenced by the strategies of some investors to actively target larger lot sizes as a way of accessing the right product and, most importantly, a way of avoiding strong competition over assets at or around the €50 million mark.
John Welham, Head of European Retail Investment, CBRE, said: “The strong start to the year confirms our expectations of a more widespread recovery in retail investment across Europe as a whole. We anticipate continued strong demand this year, particularly as we have seen a number of experienced property fund management groups announcing new funds or the enlarging of existing requirements for the retail sector.”
Jan Dirk Poppinga, Head of Retail Investment Germany, CBRE, commented on the German market: “Whilst a number of large deals influenced Q1 activity levels, such as Corio’s purchase of a €1 billion-plus shopping centre portfolio and the €316 million UniImmo: Deutschland’s purchase of a 91% stake in Berlin’s Alexa shopping centre, sentiment towards German retail assets should remain strong throughout 2010. Continuing an earlier trend, local buyers remain very active and international investors are now also starting to look at real opportunities in the market. Stable retailer turnover, relative undersupply and good quality assets means Germany will remain a key target for investors looking for core retail exposure.”
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