Retail Investment Strong in Europe

Property investment deals have been lively in the European retail sector, according to a new report. Jones Lang LaSalle claim that retail unit sales were strong in the final quarter 2012 across the continent...

Property investment deals have been lively in the European retail sector, according to a new report. Jones Lang LaSalle claim that retail unit sales were strong in the final quarter 2012 across the continent, taking full year investment to 19.4 billion Euros (GBP 16.3 billion). This is at the top end of the 18-20 billion Euros (GBP 15.1-16.8 billion) level predicted by experts.

Nevertheless, 2012's performance was below that of 2011. In Q4, direct investment in retail real estate reached 7.6 billion Euros (GBP 6.4 billion), compared with  8.5 billion (GBP 7.1 billion) the year previously. This is a considerable fall of 11 per cent and equates to a drop of 11.9 billion Euros on 2011 full year volumes.

UK and German retail markets have remained the largest in Europe, with 30 per cent and 23 per cent share respectively. This supports the findings of a previous study by Jones Lang LaSalle indicating that demand for retail units is still continuing in Britain despite the economic climate. However, it is configured retail stock in good locations that is driving the sector's performance. Medium and low end property is struggling and there is considerable polarisation.

However, shopping centres are continuing to be in high demand, with Q4 noting a total transaction volume of 5.3 billion Euros (GBP 4.4 billion). A large proportion of this was gained through the purchase of a 50 per cent stake in Sheffield's Meadowhall at 943 million Euros (GBP 794 million approximately) by NBIM from London & Stanford.  Kista Galleria in Sweden was also a big sale for the European market. Purchased by CPPIB and Citycon, the centre went for an impressive 526 million Euros (GBP 443 million approximately).

Antony Pastiroff, head of Retail Capital Markets Sweden, Jones Lang LaSalle said: “The consistent level of investment volumes over the last few years and the high number of international buyers further underline the strength of the Swedish retail market. Sweden remains resilient to the economic malaise being witnessed across many European markets, which makes it a desirable location for new retailer entrants and investors alike."

- Thursday 24 January 2013

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