Several big-ticket transactions sent retail property investment off to a roaring start in 2017 after the sector finished the previous year at about half the volume of its long-term rival, offices.
Real Capital Analytics (RCA) recorded €56 bn of retail real estate deals in 2016, down 29% on the year before, compared with €105 bn of office trades, equating to a 20% year-on-year decline.
Office has traditionally been the most active real estate sector, but in recent years retail has taken investors' fancy. As if to restore its image after the lacklustre performance in 2016, the retail sector has generated some of the largest transactions tracked by PropertyEU Research in the first quarter of this year. The top deal – which was in the make since around this time last year – was Pradera buying 25 retail parks next to Ikea stores in eight European countries for €900 mln. The acquisition from Ikea Centers was carried out on behalf of Pradera’s new European retail park fund and funded by its new Hong Kong-based capital partner LJ Partnerships.
Although nothing matched the scale of the Pradera-Ikea transaction, shopping centres – usually the most active element of retail property – saw a number of big trades in markets on Europe's edges in the first three months of 2017. Just this week CBRE Global Investors sold a portfolio of 11 retail assets in CEE to CPI Property Group, controlled by Czech billionaire Radovan Vitek, for €650 mln.
Earlier in March, Hamburg-based ECE Real Estate Partners and Rockspring Property Investment Managers sold the Olympia mall in the Czech city of Brno to Deutsche EuroShop for €374 mln. UK retail REIT Intu Properties acquired the Xanadú shopping centre in Madrid from Ivanhoé Cambridge for €526 mln, reflecting an initial yield of 4.6%. Intu, which now owns three of the top-10 malls in Spain, also acquired Xanadú’s management company and the operator of the SnowZone attraction for €4 mln.
TH Real Estate acquired a 50% stake in Kamppi in Helsinki from Barings at a price which valued the mall at over €500 mln. The yield is believed to be sub-4.5%. Meanwhile, Blackstone sold four regional centres in Poland to Echo Polska Properties for €166 mln and the Parade near The Hague in the Netherlands to Real IS for €53 mln. Meanwhile Blackstone and Catalyst Capital divested Stratford mall in London to UK fund manager Frogmore for €168 mln.
Blackstone is tapping the huge investor demand for core assets in Germany by putting the Rhein-Ruhr Zentrum, one of the country’s top-10 malls, on the market for €300 mln, PropertyEU’s sister publication EuroProperty recently reported. Earlier this month PropertyEU broke the news that Blackstone’s European retail platform, Multi, is to market 24 of its 130 centres.
