European retail volumes rise 12% in Q3: CBRE

European retail property investment grew to EUR 7.1 bn in the third quarter of 2012 - a 12% increase over Q2 2012, and the highest quarterly total so far this year, according to the latest research by global property advisor CBRE.

The Q3 2012 figure is 18% down on both the Q3 2011 level and that for the last three-year quarterly average, with lack of product being the main issue that investors are facing.

The UK and the Benelux region were the two areas that saw strong increases in activity this quarter. The UK result was boosted by 17 transactions of more than EUR 50 mln, the largest being TIAA-CREF's EUR 354 mln purchase of Festival Place shopping centre in Basingstoke. In the Benelux region, investment volumes recovered following weak activity in previous quarters, mainly due to the completion of a few large transactions in Belgium and the Netherlands.

In today's risk-averse market, investors have shied away from economically underperforming Southern Europe. This shows through clearly in the latest results as the already weak investment activity levels declined further. With only around EUR 200 mln in retail investment in Q3 2012 for Italy, Spain and Portugal combined, this is 75% below the last three-year quarterly average of EUR 734 mln.

Recent years have seen a high level of retail investment in markets such as Germany and Poland, but 2012 looks set to fall short of performance in 2011 and 2010. After record retail investment levels and with little new development completions, lack of product is proving to be the main stumbling block to further uplift in retail investment activity in these two markets.

In Germany, for example, the EUR 1.6 bn of retail investment reported in Q3 2012 was 25% below the last three-year quarterly average, even with the extra boost from the Hamburg Trust’s 78% share acquisition of Shopping Center Milaneo in Stuttgart for about EUR 400 mln.