Retail sector dominates European property investment market2% SHARE IN Q1 2010
Investment in European retail real estate reached €8 billion in the first quarter (Q1) of 2010, outpacing office investment activity with a record-high 42% share of total commercial real estate turnover, according to the latest research from CB Richard Ellis (CBRE). In stark contrast to the performance of the overall commercial real estate investment market, which saw a 32% quarterly decline in Q1, retail activity was only slightly below the €8.1 billion reported in Q4 2009.
Germany, Iberia and Norway saw the fastest growth in overall activity, with retail’s share of Q1 investment well above 50% in all three markets. With €2.7 billion transacted, the resurgence in German retail investment was particularly strong – Q1 saw a threefold increase on the 2009 quarterly average turnover of €870 million. With a 33% share of the total, Germany became Europe’s largest market for retail investment in Q1 2010, outpacing the UK where only €2.1 billion was transacted.
The increase in retail investment activity across Europe reflects the growing number of larger lot size transactions completed in Q1 2010. Whilst Corio’s purchase of mostly German shopping centre portfolio has been the only €1 billion-plus transaction this year to date, there was a reported increase in €200 million-plus deals that changed hands compared to the previous quarter, especially in the shopping centre sector. This is partly influenced by the strategies of some investors to actively target larger lot sizes as a way of accessing the right product and, most importantly, a way of avoiding strong competition over assets at or around the €50 million mark.