Investment in European retail property doubles in H1:JLL

European retail real estate transaction volumes amounted to EUR 10.6 bn in H1 2010, more than double the EUR 5 bn recorded in the same period in 2009, according to preliminary figures published byJones Lang LaSalle on Monday.

Transactions in Q2 2010 totalled EUR 4.9 bn with the average lot size remaining largely stable at just over EUR 50 mln. The volume of completed transactions in Q2 2010 reinforces the continued positive attitude of investors since September 2009.

Investors remained focused on the three largest European markets; the UK, France and Germany. Whilst Germany saw the greatest volume traded in Q1 (EUR 2.3 bn), ahead of the UK for the first time in a decade, the UK regained its number one position in Q2 with EUR 2 bn traded, more than 40% of the total volume and number of deals during this period.

David Raven, Head of Shopping Centre Investment at Jones Lang LaSalle commented: 'During the first half of 2010, vendors began releasing stock onto the market to match the investor demand targeting the sector. Pricing has moved considerably with values jumping some 25% over the past year as a result of yield compression alone. Institutional investors have dominated purchasing over the first half of the year. Looking forward we anticipate that debt-based property companies and opportunity funds will dominate buying activity; this will require banks to begin lending on less prime assets. The majority of selling over the second half of the year is anticipated to be undertaken by or at least directed by banks resolving some of their distressed positions.'

France saw significant activity in Q2, recording the second-largest volume with over EUR 800 mln traded. Investors are capitalising on recent rare opportunities to secure well leased, high quality product in one of Europe’s most sought after retail markets. Major transactions included the acquisition of the Cap 3000 shopping centre in Saint-Laurent du Var near Nice by a joint venture between French retail specialist Altarea, Dutch pension fund ABP and Crédit Agricole Assurances' Predica from Galeries LaFayette for EUR 450 mln. This is a prime example of the strong appetite for dominant, regional shopping centres, particularly from equity / sector specialist partnerships.

Other transactions include the acquisition of McArthur Glen Troyes by Resolution from the Henderson Outlet Fund and the sale of 75% of Espace Saint Quentin by Hammerson to Allianz.

Shopping centres remained the principal target for investors in H1 2010, accounting for 72% of the total volumes. Supermarket investments increased in Q2, accounting for almost 10% of the total volume. This was largely due to a significant portfolio sold by Eroski in Spain to European fund manager AEW for EUR 150 mln.