European Retail Real Estate Investment Volumes

Jones Lang LaSalle reports a strong result for retail investment in Europe in 2011, against a continuing backdrop of economic uncertainty. Preliminary figures indicate total transaction volumes will exceed €28bn, an increase of around 35% on 2010.

Jones Lang LaSalle reports retail real estate investment remained strong in the final quarter of 2011.Preliminary analysis suggests that direct investment in retail real estate for the year is likely to exceed €28bn, which Jones Lang LaSalle forecast earlier in the year, representing a significant increase on 2009 and 2010 total volumes of €12.3bn and €20.7bn respectively.

Geographically, the majority of activity remains focused on the UK and Germany. The UK leads the rankings, despite a strong second half of the year for Germany. Capital Shopping Centres’ purchase of the Trafford Centre in Manchester for over €1.8 billion in the first quarter, was the major purchase in the UK market in 2011, whilst the purchase in the fourth quarter of Perlacher Einkaufs Passagen (known as PEP shopping centre) in Munich by TIAA-CREF (the US teachers’ pension fund) from RREEF for over €400m, boosted the total volume in Germany.

France and Sweden enjoyed strong final quarters. In France, La Française AM, an investment fund majority-owned by Crédit Mutuel Nord, purchased a portfolio of Carrefour properties for €365m. In Sweden, the fourth quarter saw the purchase of a portfolio of three shopping centres in Stockholm, by AMF Fastigheter, the property subsidiary of Swedish pension fund AMF. The Stockholm portfolio was bought from Centeni, a company owned by the Royal Bank of Scotland,

Jeremy Eddy, Head of European Retail Capital Markets, commented, “2011 saw the development of a multispeed Europe, with national economic performance and stability dictating investment flows and pricing. Around 75% of the total transaction volume was completed in just five countries. This polarisation was not only limited to geography, as 2011 saw an absolute focus on prime property. We expect a similar trend in 2012, however we also identify and urge a greater focus on micro locations, and particularly the sustainability and affordability of rents irrespective of geography. This approach will assist investors to identify opportunities outside of the core markets, which will remain the narrow focus of the majority, and ultimately unlock greater returns in the long term.”