Germany overtakes UK as largest retail investment market: CBRE

Germany was the largest retail property investment market in Europe after outpacing the UK for the first time ever in the third quarter of 2011, according to the latest data from global real estate adviser CBRE.

Underpinned by strong economic and occupier market fundamentals, Germany reported close to EUR 2.3 bn of retail investment in Q3 2011. The shift started earlier this year and, considering the size of its economy and country's geographic structure with a large number of business centres, is expected to be maintained in the near-to-mid-term, CBRE said.

The UK, having seen downward revisions to its economic growth forecasts and a decline in consumer spending, reported its weakest quarterly retail investment result since Q1 2009 at EUR 1.8 bn for Q3 2011. Of the 36 transactions reported, just one retail property with a lot size of EUR 100 mln-plus was completed. However, investor demand for good quality product remains strong, with a growing number of international players, including several euro-dominated investors completely new to UK retail investment, currently seeking opportunities.

Together, Germany and UK comprised 51% of total retail investment activity in Europe, which grew only marginally in Q3 2011. A total of EUR 7.8 bn was transacted during the quarter, a 3% increase over Q2 2011, but significantly below the previous six-quarter average of EUR 9.4 bn.

According to CBRE's EU-15 High Street Retail Yield Index (currently at 4.98%), most of the falls in yields took place in the CEE region: Russia (75 bps), Czech Republic (25bps), compared to Q2 2011. Reflective of weakening fundamentals and looming sovereign debt concerns, Spain, Greece and Portugal all reported outward movements in shopping centre yields in Q3 2011.

The November edition of PropertyEU magazine examines retail investment in Germany and other major European markets. Click on the link below to subscribe and order your copy.