Record volume in Q4 boosts annual retail investment volume
Investors demonstrated strong appetite for retail assets especially in the UK (€11.1 billion) and Germany (€9.3 billion) which accounted for 33 percent and 27 percent of this volume respectively, says recent DTZ Research. Southern Europe posted the biggest increase in volume over the year, with €3 billion of acquisitions recorded in 2013, up from €0.7 billion in 2012.
Market players have continued to favour shopping centre assets, which accounted for 61 percent of retail investment volumes recorded in 2013. As a result, shopping centre investment rebounded sharply in 2013 with volumes reaching €17 billion, up from €13.7 billion recorded in 2012. The UK shopping centre market was extremely buoyant, accounting for 31 percent of the European volume. Outside the core markets, Southern Europe recorded strong levels of activity with a total volume close to €1.7 billion in 2013.
Adrian Powell, Head of EMEA Retail at DTZ, commented: “With Europe’s improving macro-economic outlook, we are seeing a long awaited return of consumer and retailer confidence. This positive commercial environment continues to attract an increasing supply of capital to retail markets across Europe from both Core and Value-add investors resulting in downward pressure on yields, particular in markets that have been starved of capital growth over recent years. Market players are continuing to favour shopping centre assets, accounting for 61 percent of total retail investment in 2013.”
Domestic investors were dominant in the shopping centre market and accounted for 54 percent of the acquisitions recorded in 2013. On the cross-border side, non-European investors, accounting for 27 percent of the total volume, have favoured a wide range of countries across the region including the core markets, the CEE and Southern Europe.
Funds remained the most dominant player in the retail and shopping centre investment markets, covering all lot sizes. On a net basis they have increased their exposure by €3.6 billion in the European shopping centre market. Listed property companies have been mainly focused on assets priced between €100 million and €500 million but have remained net sellers in 2013.
Marius Grigorica, Senior Consultant at DTZ Echinox, said: "In Romania, the volume of investment in the retail sector has increased significantly in 2013 compared to 2012 to about €190 million, which represents almost 60 percent of the total investment in commercial property. However, analysing the total volume of the European retail investment, local transactions account less than one percent, most purchases being made by a single investor. Looking ahead, due to improving macroeconomic indicators, we expect Romania to become more attractive for the foreign investors, especially for those aiming higher yields than in the West European markets."
Magali Marton, Head of CEMEA Research at DTZ, concluded: “Going forward, the retail segment is likely to continue to benefit strong investor’ interest. On the prime segment they will take advantage of the rebound in shopping centre development across the region. In this context we expect retail investment to reach €38 billion in 2014 out of which €17-18 billion to be invested in shopping centres.”