European retail investment is lower than at any point since the collapse of Lehman Brothers signalled a major property crash in 2008. According to CB Richard Ellis, just $5.9 billion was invested in European retail property in Q1, compared to 12.6 billion Euros in Q1 2011 and 9.3 billion Euros in Q4 2011 – US$5.9 billion is about 4.69 billion Euros.
Michael Haddock, CBRE's senior director of EMEA research, said the market was hit by a lack of attractive stock, as owners of the best quality properties sat on them amid the economic uncertainty.
"There's nothing available of the quality that people want to buy," he told Reuters. "The thing that would help retail investment activity recover would be a renewed interest in poorer quality retail assets, which would be predicated on an economic recovery which at the moment we're not seeing."
A major stake in British Land's (BLND.L) Meadowhall shopping centre in Sheffield, UK, is the only prime mall asset up for sale in Europe, CBRE said. It has attracted interest from Norway's sovereign wealth fund and the Canada Pension Plan Investment Board, three sources familiar with the talks said.
Notwithstanding the reasons given by CBRE, the drop also has to be put down to a lack of confidence as not only does the European debt crisis still without a viable solution, but has taken a turn for the worse after the Greek public rejected parties supporting the bail-out package at the polls. Not to mention the zero GDP growth in the bloc in Q1 threatening to send it back into recession.
Some experts are predicting a recovery in European retail investment over the rest of the year, but at the moment it is certainly very difficult to see where that recovery could possibly come from.
- Tuesday 29 May 2012