Continental European retail investment may exceed EUR 20 bn in 2006

A total of EUR 14.6 bn was transacted in continental European retail real estate in the first nine months of 2006, almost matching the total of EUR 14.7 bn for all of 2005, according to new research published by Jones Lang La Salle at the start of the Mapic trade fair in Cannes, France on Wednesday.

The volume of transactions for the first nine months of the current year was 50% up on the same period last year and nearly three times higher than in 2004. And, the number of transactions in the first three quarters of 2006 (286) surpassed last year's number (249) by 15%, Jones Lang La Salle said. 'It is highly likely that total volumes for 2006 in continental Europe will exceed EUR 20 bn - a 35% increase on 2005,' said Richard Bloxam, a director and joint head of European of retail capital markets at Jones Lang LaSalle.

GERMANY

Co-head of the division, Jeremy Eddy added that Germany will stay the most active market for the foreseeable future. Some EUR 4.4 bn - 31% of the total volume - was spent in Germany from the first to third quarter of the year. Poland was in second place on the investor wish-list, accounting for EUR 2 bn, which included the major Casino and Apollo transactions. Sweden was in third place on EUR 1.8 bn. Italy, France and Portugal were notable for relatively low volumes. 'We do not see a catalyst that will increase volumes in the western markets of France, Portugal and Italy significantly above those experienced this year.' Investor interest in Central and Eastern Europe remains strong with Russia likely to perform very well in 2007. 'New markets to watch are Ukraine, Romania and Turkey,' Eddy said.

PORTFOLIOS

Discussing the types of transactions conducted, the report said portfolio deals have been the key feature of the market to date in 2006, representing 46% of all transactions in Germany and Sweden and more than 60% in the Central European Countries. Shopping centres were the most popular product, accounting for 64% of transactions by volume, totalling EUR 9.3 bn. Another EUR 3.8 bn was spent on retail warehousing and EUR 1.5 bn on supermarkets.
Although the total volume of retail transactions in the report excludes high street deals, Jones Lang LaSalle said more than EUR 2 bn of high street portfolio deals had been completed so far in 2006, mostly in Germany.

GLOBAL INVESTORS

Some 25% of the total capital invested in European retail real estate came from UK investors, who mainly acquired shopping centres and retail warehousing units in Germany, Sweden and Russia. While Europeans remain the largest investor group in the European market, global investors, typically private property groups and third-party managed funds, are growing in importance, spending EUR 3.3 bn in the first nine months of the year.