Investment turnover in the European retail property market slowed significantly in the first quarter of 2012 (Q1 2012) with few large transactions taking place, according to global real estate adviser CBRE.
Investment turnover in the European retail property market slowed significantly in the first quarter of 2012 (Q1 2012) with few large transactions taking place, according to global real estate adviser CBRE.
Retail property investment in Europe totalled EUR 4.6 bn in Q1 2012, marking a 64% fall in activity compared with the last quarter of 2011 and less than a half of the quarterly average from the last two years of EUR 9.4 bn.
Activity slowed across all geographies, bringing the retail share of overall European commercial property investment to under 20%. While investor sentiment remains particularly buoyant in Germany, activity in Q1 2012 still fell to EUR 1.3 bn, well below the last two year quarterly average of EUR 2.4 bn.
Just under EUR 200 mln of retail investment was recorded in Central and Eastern Europe (CEE) - with lack of finance and suitable product contributing to the subdued transaction level.
Banks and other lenders are a potential source of new product. In the light of further deterioration in lending sentiment and new banking regulations, lenders are becoming more active in their deleveraging strategies. There is more product coming onto the market - in most cases through ‘encouraged by the bank’ sales, carried out by the original borrower. This offers significant opportunity to access product, especially with respect to value-add and more secondary assets that offer higher return potential.
John Welham, head of European Retail Investment, CBRE, commented: 'First-quarter figures show lower levels of investment activity across Europe, with retail falling below EUR 5 bn. However, with pressure to sell increasing for a number of investor groups, we expect European retail investment activity to pick up again from Q2 2012 onwards.'
