Retail property investment volumes slump

Published:  17 April, 2012

Jones Lang LaSalle reports European retail real estate investment reduced in the first quarter of 2012, after an exceptional 2011

Preliminary analysis suggests that direct investment in retail real estate for the quarter is likely to be in the region of €3.8bn, representing a significant decrease on €9.9bn a year previously, and also on the previous quarter’s €8.4bn. The quarter was characterised by a lack of large transactions, which boosted volumes in 2011.

Despite volumes being down across the board, geographically the majority of activity remains focused on Germany and the UK. Allianz’s purchase of the remaining 45 per cent stake in Europa Passage in Hamburg from HSH Nordbank for around €200m was the major transaction in the German market. The largest shopping centre deal in the UK market was the purchase of Ocean Terminal in Edinburgh by Resolution from Forth Ports (advised by Jones Lang La Salle) for €108m.

Shelley Matthews,JLL’s European retail capital markets director, said: “A couple of factors are in play. Firstly, the sustained economic pressures are restricting the availability of debt finance, especially for new borrowing, which when combined with narrowing investor requirements, is limiting transactions. Secondly, the uncertainty caused by the on-going Eurozone crisis has slowed down the transaction process in some markets, which in conjunction with the lower levels of deal origination witnessed in the second half of 2011, has resulted in fewer deals reaching completion in Q1 2012. However, we expect volumes to pick up in Q2 and over the remainder of the year, in particular in Germany, Poland and the Nordics due to more solid fundamentals and a greater depth to the investment market.”

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