European retail investment volume up 68% in 2010

Direct investment in retail real estate in Europe during 2010 reached over EUR 20.6 bn, a rise of 68% on 2009 (EUR 12.3 bn), according to Jones Lang LaSalle. 150 transactions were recorded in Q4, boosting total volumes for the three-month period to EUR 6.7 bn, up almost 80% on Q3.

Over the course of the year, the European retail real estate market saw approximately 50 deals of at least EUR 100 mln, together totalling just under EUR 10 bn, half of the annual total transacted. Twenty of these were completed in Q4 - most notably the British Land acquisition of Drake Circus shopping centre in Plymouth, UK, for over EUR 275 mln in December and Rockspring’s EUR 224 mln purchase at the end of October of a 51% stake in O’Parinor shopping centre, Paris. Jones Lang LaSalle advised on both transactions.

The UK closed 2010 as strongly as Germany started, enjoying its busiest period since the end of 2007 with investment volumes surpassing the EUR 2 bn mark in Q4. Overall the UK accounted for 31% of Europe’s total volume in 2010, with Germany adding a further 23%. The Netherlands and France together transacted EUR 1.4 bn during Q4 bringing their combined total for the year to EUR 4 bn, with both markets maintaining their momentum throughout the year. Poland continued its strong performance from Q3, transacting EUR 677 mln during the final quarter of the year and cementing its place as the fifth largest retail investment market in Europe during 2010.

Jeremy Eddy, Head of European Retail Capital Markets at Jones Lang LaSalle, commented: 'A steadily improving retail real estate investment market during 2010 has been punctuated by uncertainty around sovereign debt and greater consumer caution. As a result, the market has evolved into multi-speed geographies and increasing polarisation between prime and secondary. We have seen some major transactions led by European REITs seeking to expand and consolidate their platform as well as landmark transactions from liability driven investors locking into long-term real estate returns alongside sector specialists, providing the compelling marriage of equity and expertise.'