Appetite for retail investment has swung back in Europe this year.
Appetite for retail investment has swung back in Europe this year.
According to figures from DTZ, retail investment reached €32 bn in the first nine months of 2014, up by 47% year-on-year. The retail sector is one of the most sought after sectors as the European economy is gradually emerging from recession and attractively priced opportunities are now numerous in a wide range of countries in the region. Investor’s appetite having also extended beyond the core country focus in crisis years.
Amid much improved sentiment, specialised retail fund managers like Meyer Bergman, Resolution and ECE have returned to the fund-raising trail and are currently in the process of deploying the capital they have raised.
CBRE Global Investors is also expected to launch a new €1 bn shopping centre investment strategy by the end of the year which will combine exposure to Europe’s core markets with southern Europe and CEE. The new strategy will be a follow-on vehicle from its first European shopping centre fund and will seek to raise €500 mln of equity, versus the €380 mln raised by Fund I.
It will be interesting to see where they source their product. New developments are drying up in western Europe and the big listed players have more or less sewn up the market for large schemes that are dominant in their catchment areas. My bet is that in the coming years a growing number of retail investors will be scouring the mature markets for smaller and medium-sized schemes that require more than just some tender loving care due to delayed capex, but also a refurbishment and/or extension and possibly even a full-blown redevelopment.
That market is sizeable and growing. A preliminary assessment that Bouwfonds Investment Management conducted of shopping centres in the Netherlands, Germany and France with potentially attractive locations revealed that nearly 50% of the total shopping centre floor space identified is in need of refurbishment.
The UK is not covered by the survey, but new data collected and analysed by ICSC and PropertyEU for the European Retail Atlas shows that the UK is well ahead in Europe in terms or refurbishment and redevelopment. The number of large retail schemes up for grabs is relatively thin across the country so it is no wonder that some of the bigger global and European investors are eyeing the St James redevelopment in Edinburgh. The centre is owned by TIAA Henderson Real Estate and is the largest private-sector project outside the centre of London, development director Martin Perry told us in an interview.
The €1 bn project will create 93,000 m2 of retail space, a luxury hotel and up to 250 new homes. In addition to the retail section of the project, the fund manager is looking for investors in the hotel and residential sections, Perry said. TH Real Estate has already received unsolicited interest in co-investment – and more may well be on the way once the project has been showcased next week at Mapic.
Judi Seebus
Editor-in-chief
Want the latest data and expert opinion on the key trends driving the European shopping centre sector? The European Retail Atlas - produced by PropertyEU and ICSC - is published in November and will be pre-launched at MAPIC in Cannes (19-21 November).