European property investment climbs by a third in 2011

European retail real estate investment volumes will reach EUR 28bn in 2011, an increase of around 35% on 2010 despite the continuing economic uncertainty, according to consultancy Jones Lang LaSalle.

The preliminary figures show retail real estate investment remained strong in the final quarter. Geographically, the majority of activity remains focused on the UK and Germany with the UK leading the rankings.

Capital Shopping Centres’ purchase of the Trafford Centre in Manchester for over EUR 1.8 bn was the major purchase in the UK market in 2011.

France and Sweden also enjoyed strong final quarters, JLL said.

‘2011 saw the development of a multi-speed Europe, with national economic performance and stability dictating investment flows and pricing,’ said Jeremy Eddy, head of European retail capital markets, in a statement.

‘Around 75% of the total transaction volume was completed in just five countries. This polarisation was not only limited to geography, as 2011 saw an absolute focus on prime property.’

JLL expects a similar trend in 2012 but says investors should put greater focus on micro locations, and particularly the sustainability and affordability of rents irrespective of geography.

‘This approach will assist investors to identify opportunities outside of the core markets, which will remain the narrow focus of the majority, and ultimately unlock greater returns in the long term,’ Eddy said.