Retail sector sees more cross-border demand

European retail markets saw increased activity in the first half of 2013 and more cross-border buying is expected in the second half, according to Cushman & Wakefield.

In its Q2 retail investment update for EMEA, the adviser said €16.3 bn of assets traded in the first six months, up 31% on the year-earlier period.

Cushman & Wakefield predicts full-year investment volumes will hit €37bn, up 8% on 2012, based on sustained strong demand from overseas investors in particular.

‘We are anticipating an increased flow of cross-border money into the retail sector and in particular, more interest from Asian funds following the successful purchase by Allianz of Silesia City Center in Katowice, Poland, for €412 mn on behalf of a consortium which included Asian partners,’ said Michael Rodda, head of EMEA retail investment.

He noted that investors were starting to look further afield or take on more risk - usually via development - to find quality product as demand for prime assets continues.

With a 32% market share, the UK remains Europe’s largest retail investment market and has seen volumes rise 94% over the first six months compared to 2012. Significant transactions in the second quarter included CPPIB’s acquisition of a share in the Bull Ring, Birmingham.

Commenting on these patterns, Rodda said the Nordics were strong in H1 and this trend is expected to continue into the second half of the year. A number of notable transactions were carried out in Central and Eastern Europe such as Atrium’s acquisition of Galeria Dominikanska in Poland. ‘There is also now real momentum building up in Iberia, where we expect to see a surge in activity as rental re-pricing looks to have bottomed out and improving availability of finance appears to be on the horizon,’ Rodda said.