Abu Dhabi Investment Authority (ADIA) is investing in shopping centre development Mall of Switzerland.
Private equity fund manager FREO, backed by ADIA’s Tamweelview European Holdings, is funding the scheme in Ebikon, Luzern. Investment in the retail segment of the scheme amounts to CHF 450m (€368m).
The mall’s previous developer, EbiSquare was bought by developer Halter, which can now go ahead with construction following its purchase of 73,000 sqm of land reserves from Schindler.
Construction of the mall will begin next month, three years after Halter was given exclusive rights to develop the mall and seek investors. Development of the centre had been delayed by an appeal against the original plans, which was withdrawn earlier this year.
The centre will include 46,000 sqm of retail, as well as leisure space and restaurants. Anchored by Coop, the mall is scheduled to open in 2017.
ADIA is one of several sovereign wealth funds to increase investment in European real estate. Savills estimates that investment by SWFs in 2013 rose 30% year-on-year.
The agent said there was a change in strategy among SWFs, which have typically preferred ‘big-ticket’ transactions. Average deal size was up to €700m from €247m in 2012, with portfolios growing in popularity.
Marcus Lemli, head of European investment at Savills, said SWFs’ preference for low risk, core investments above €200m had limited the markets in which they are active due to lack of stock.
“However, we have seen this investor type looking for value in non-core deals as well as smaller lot sizes,” Lemli said.
Asia Pacific and Middle-Eastern funds dominated Savills’s study. Savills expects SWFs to record similar investment volumes in 2014.