European retail investment activity edged up 6% to EUR 6.13 bn in Q2 2012 compared to EUR 5.75 bn in the first three months of the year, but was down 33% over the first half compared to the last six months of 2011. The H1 2012 figure came in at EUR 11.8 bn compared to EUR 17.7 bn in H2 2011.

European retail investment activity edged up 6% to EUR 6.13 bn in Q2 2012 compared to EUR 5.75 bn in the first three months of the year, but was down 33% over the first half compared to the last six months of 2011. The H1 2012 figure came in at EUR 11.8 bn compared to EUR 17.7 bn in H2 2011.

The second-quarter result is significantly lower than the quarterly average for the last two and a half years of EUR 8.7 bn and reflects the constrained supply of core product.

Retail investment activity has slowed in most European markets this year. The Central and Eastern Europe (CEE) and Nordic regions, both seen as retail activity hotspots in previous quarters, declined compared with both the first and second half of 2011. Russia was the only market to report robust transactional levels in H1 2012, including four large shopping centre deals, three of which concluded in Q2 2012.

After a very strong couple of years for retail investment, difficulty in sourcing product has started to impact Germany as well. This was especially the case in Q1 2012, although the market grew to EUR 1.8 bn in Q2 2012, putting Germany ahead of the UK, where circa EUR 1.5 bn was transacted.

Investment in prime shopping centres has been the focus of demand and a driving force behind retail investment activity in Europe in recent years. However, property investors are also interested in quality product in other retail segments such as High Street assets. Examples include Qatar Investment Authority’s purchase of 52-60 avenue des Champs Elysées (main tenant Virgin Megastores) for circa EUR 500 mln and PonteGadea Immobilianria’s purchase of Luminar House, Oxford Street (main tenant Zara) for EUR 185 mln.

John Welham, Head of European Retail Investment, CBRE, commented: 'Prime retail yields generally remain stable, with some exceptions such as Italy and the UK regions, where some upward yield movements have been registered in Q2 2012. There is also evidence of weakening in secondary market segments, with the latest CBRE data showing increases in secondary retail yields across a number of large European markets, including Italy, Netherlands, Sweden and the UK.'