MAPIC: Shopping centre investment to remain buoyant - DTZ

Shopping centre investment across Europe was the driving force behind increased overall retail sector expenditure in the first three quarters of 2013, according to data from DTZ.

Overall commercial property investment volumes in Europe grew by 18% to €89.9 bn of which €21 bn (€18 bn in 2012) was in the retail sector across Q1-Q3 of 2013.

Shopping centres have proved to be particularly attractive and accounted for nearly half (45%) of retail investment volume since the beginning of the year. Total shopping centre investment has rebounded sharply (+27%) in 2013 with overall volumes amounting to €9.6 bn at the end of Q3 compared to €7.5 bn in the same period last year.

The UK was a particularly attractive target with asset sales (€3.2 bn) representing a third of total European activity, followed by the German market at €2.7 bn. Elsewhere Central and Eastern Europe, in particular Poland, as well as Southern Europe also registered strong levels of activity.

Magali Marton, DTZ’s head of research for CEMEA, said: 'Commercial property investment volumes in Europe have been strong across 2013 and we anticipate that this will continue into the final quarter of the year and in 2014. The retail sector, and specifically the shopping centre market, will continue to welcome increasing capital flows.

'We expect investors’ focus will remain on the three core markets (UK, Germany and France) but we also anticipate more country diversification to CEE and Southern Europe from value-added or opportunistic funds.'

Domestic investors have been dominant in shopping centre activity over the first three quarters of 2013 accounting for nearly 40% of acquisitions. On the cross-border side, European investors represented 20% of total transaction volume with particular attention on the Polish market which made up half of deals completed. Non-European investors have been active in Southern Europe.

Funds remain the major player in the overall retail and shopping centre investment markets, covering all lot sizes. However, their presence is getting stronger in large lot size assets. Listed property companies have been mainly focused on assets of between €100 mln and €500 mln. Their investments have been balanced between domestic acquisitions and purchases outside their home market.

Adrian Powell, DTZ’s head of EMEA retail, said: 'As Europe gradually emerges from the economic crisis, financial indicators such as GDP, retail sales and consumer spending are predicted to return to positive territory over the next five years. This backdrop is fuelling the investment in the retail commercial property sector across Europe. The UK and Central and Eastern Europe are looking particularly buoyant from an investment perspective and we expect these trends to continue in 2014.'

Here's a link to all the news from Mapic 2013