Retail property investment sets pace in Europe

Increasing demand for prime retail property assets is driving the recovery in the European commercial real estate investment market, finds report .

Investment in retail property in the first quarter of 2011 grew at a greater pace than the rest of the European market, accounting for 43 per cent of total transactions in the quarter.

The €12.2 billion (£10.7 billion) transacted represents a quarter on quarter increase of 4 per cent – the highest quarterly total since the fourth quarter of 2007 – according to the CB Richard Ellis (CBRE) European Capital Markets report.

It shows that in the first quarter of this year, direct European commercial real estate investment reached €28 billion, up 32 per cent on the same period in 2010. While this is lower than the €38.6 billion investment in the fourth quarter of last year, the commercial real estate adviser CBRE, says it is in line with the continuing investment activity that began in late 2009.

Michael Haddock, director of EMEA capital markets research at CBRE, explains that the retail sector is ahead of the rest of the market in terms of activity.

‘The uplift is being driven by the deep pockets of institutional investors looking to increase their direct exposure to the sector – a trend expected to continue to support further recovery at the core end of the commercial real estate market generally,’ he adds.

The report shows that industrial and logistics property experienced a similar uplift in investment activity in the first quarter of 2011 to €2.8 billion, representing 10 per cent of the European total in the period.

The CBRE’s head of European retail investment, John Welham, identifies that throughout the latter part of 2010 and into 2011, the number and type of active investors broadened, and their interest ‘shifted further along the risk curve’.

‘This shift in demand towards ‘value add’ is strongest in the retail sector, while geographically, the expectations are that Germany, Sweden, Spain and CEE markets are set to benefit most in the short term,’ Welham says.

Todd Cardy

Todd Cardy

Todd was Editor of between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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