Retail remains sector of choice for core investors: LaSalle

Retail will remain the sector of choice for risk-averse core investors in 2013, according to LaSalle Investment Management.

Retail will remain the sector of choice for risk-averse core investors in 2013 due to its defensive characteristics, according to LaSalle Investment Management’s Annual Investment Strategy report.

That said, there will be fewer transactions in 2013 than in 2012 as investors remain reluctant to sell. The focus should be on prime high street properties in major cities, or dominant fit-for-catchment units in secondary cities, says LaSalle. In France and Germany, shopping centres may offer the best opportunities, while in the UK, supermarkets or high-quality retail parks are the best bets.

LaSalle also cites mezzanine debt and near-CBD submarkets as the best investment opportunities in Europe next year.

With credit conditions set to remain tight well into 2013, mezzanine debt will provide the best risk-adjusted returns in a low-growth Europe. ‘In 2013, there should be a plethora of high-profile deals in this sector,’ the investment manager says. ‘Total returns secured on core assets in the order of 8% to 10% are achievable, with higher returns available higher up the risk curve,’ it notes.

The near-CBD submarkets will also offer distinct opportunities. Growth in the technology sector will continue to thrive going forward, focused on but not limited to a number of large household brands and their related companies, says LaSalle. ‘These tenants are more established than the start-up dotcom companies of the previous decade, and are expanding into mid-sized, good quality, flexible space in established submarkets.’

LaSalle says there will be an abundance of fairly priced core assets across Europe but heavily discounted prime assets are unlikely to materialise. The investment manager also sees niche opportunities in European offices, hotels and data centres.