#Mapic2014 Spain third most active retail market in Europe – C&W

Spain has overtaken France as the third most active retail market in Europe after the UK and Germany, according to Cushman & Wakefield.

Retail investment in Spain more than doubled in the past year to its highest level since 2008 with major recent deals including the sale of Islazul in Madrid by the JV of Ivanhoe Cambridge and Grupo Lar and Anec blau in Barcelona by Grosvenor International Property Trust. ‘Prime yields have fallen considerably and for shopping centres we expect them to fall to around 5% net by the end of year,’ said Rupert Lea, head of retail in Cushman & Wakefield’s Spanish team.

Although Ireland, Austria and the Netherlands saw the strongest growth in percentage terms, Spain ‘is perhaps the standout recovery market’, C&W said, with its market share nearly trebling in the past 18 months (from 1.8% to 5.2%) and yields falling at a faster rate than in virtually any other market. Only Ireland saw faster compression, with a 200 bp drop in the past year compared to 130 bp in Spain and 98 bp in Portugal.

Retail investment volumes across EMEA totalled €11 bn in Q3 versus €8.6 bn in the year-earlier period. However, retail saw its market share fall to 22% in Q3 from 29% in Q2 as other sectors provided more opportunities.

Retail volumes fell 24% between Q2 and Q3 while industrial transactions rose 17% and offices 8%. C&W said this partly reflected the distortion caused by some of the large deals carried out in Q2 and also a lack of new high quality retail opportunities emerging in some markets.

But according to Michael Rodda, head of EMEA retail capital markets at Cushman & Wakefield, this is likely to prove a temporary dip. ‘Since the summer we’ve seen a lot more stock being prepared for marketing and while much has been secondary, investors are interested where they can see value and recovery potential. What is more we’re also seeing a lot of high quality schemes and high street assets now coming forward. As a result we’re anticipating a very strong quarter and perhaps the best Christmas the retail property sector has had since 2007,’ he said.

Based on a strong Q4, volumes across EMEA are forecast to rise 26% to €52.5 bn for the full year in 2014.

Looking ahead, bank stress tests and quantitative easing may produce ‘a perfect storm’ and even stronger activity in 2015, C&W said. ‘The ECB’s bank stress tests and emerging plans for quantitative easing will potentially add to both supply and demand and as a result, not only will we end 2014 on a high but all the signs point to no siesta for the markets in 2015,’said David Hutchings, head of EMEA investment strategy at Cushman & Wakefield.

Want the latest data and expert opinion on the key trends driving the European shopping centre sector? The European Retail Atlas - produced by PropertyEU and ICSC - is published in November and will be pre-launched at MAPIC in Cannes (19-21 November).

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