The amount of money poured into the European retail real estate sector increased in the second quarter of this year, reaching EUR 6.13 billion (GBP 4.8 billion). In its latest research, CBRE revealed this represents a rise of EUR 0.38 billion over the first three months of 2012. According to the firm, high-quality assets in prime locations remain the focus for investors, although there is a shortage of such properties on offer in some markets.
Iryna Pylypchuk, associate director of Europe, the Middle East and Africa research at the organisation, described the investment sector as "a two-speed market", where prime assets perform considerably better than their less desirable counterparts. "The scarcity of core product on the market means that some investors will have to look elsewhere, with core plus and value-added opportunities currently an attractive middle ground due to limited investor competition," she explained.
In its Spotlight on UK Shopping Centre Investment, Savills noted stock is not only restricted at the prime end of the market. The firm said fewer financial institutions are putting shopping centres up for sale than had been anticipated, with Savills stating this is resulting in assets shedding value "while the banks decide what to do". A further stumbling block to property investment in shopping centres in the UK is the lack of available finance. The organisation pointed out loan-to-value ratios have slipped to between 40 and 60 per cent, while there is little desire to offer finance for deals on secondary assets.
John Welham, head of European retail investment at CBRE, said there are indications secondary markets in a number of countries - including the UK, Sweden, Italy and the Netherlands - are weakening, with higher yields being offered on real estate in this asset class. He added that, for the most part, prime yields have remained stable with little sign of any significant movement.
- Monday 30 July 2012