GLOBAL – North American investment in the European retail property market has surged in the first half of this year, as investors from the continent bought a net €1.6bn in the sector, reversing their €1.2bn net withdrawal in the whole of 2012, according to research.
The study by real estate investment manager CBRE showed that, based on acquisitions alone – rather than acquisitions and disposals combined – North American investment totalled €2.39bn between January and June, more than the €2.08bn seen in the full 2012 year.
Total retail property transactions in Europe rose to €15bn in the January to June period, up 17% from the same period last year.
However, this was still lower than the second half of last year, when €21.5bn of deals took place.
Investors from North America focused their acquisitions on Russia and the UK, the research found, while also making purchases in major Western European markets including Germany and France.
Iryna Pylypchuk, associate director of EMEA research at CBRE, said: "North American investors stayed firmly focused on the shopping centre segment, which matches their preference for large deal size and their familiarity with the shopping centre sector."
Shopping centres made up three-quarters of North American investors' retail acquisitions by value in the period, she said.
"This is very much in contrast to Asian and Middle Eastern capital, which, while acting across a wide range of geographies, has shown a clear preference for high street retail," she said.
CBRE said that, in the last 18 months, American investors had set record-breaking deals in Europe, in terms of lot size, and they continued to do so in the first half of this year.
As an example, the firm cited Morgan Stanley's purchase of the Metropolis Centre in Moscow, which it said was the largest retail deal in Europe and twice the size of the second-largest retail transaction.
As evidence that the appetite of North American capital for European retail went beyond the direct investment market, CBRE said US real estate fund manager Blackstone was close to completing a takeover of Multi, one of the largest shopping centre developers in Europe.
Participants in the broader property markets have noted a strong resurgence of interest among North American investors in Europe in the last six months.
The reluctance of banks to lend is said to be leaving sellers with few solutions.
The CBRE research highlighted the UK and Germany as by far the two largest markets in the retail property sector in the first half, with transaction volumes of €5.34bn and €3.73bn, respectively.
This was in keeping with the historical trend, the firm said.
They were followed by Central and Eastern Europe with €2bn, it said, which had been driven by demand for Russian retail in particular.
This development had pushed the Nordic region into fourth place and France into fifth, CBRE said.