Retail investment soars in Europe

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Investments in European retail businesses increased by 41% to reach €62.6bn in 2015, according to new figures.

Global real estate company, Savills, said shopping centre investment volumes surpassed the previous peak reached in 2007, when €22.2 billion was invested in the market.

This has been attributed to investors being attracted by a strong demand for space in Europe’s prime shopping destinations and well located secondary assets.

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Retail transactions as a share of overall commercial investment activity increased from 22% in 2014 to 26% last year.

In some markets, including Belgium, Finland, The Netherlands, Norway and Spain, retail properties accounted for a higher proportion of investment deals than the office sector, which traditionally dominates real estate investment activity.

Most retail investment originated from international sources, with 57% of transactions taking place cross-border with American, French, UK and Canadian buyers being particularly active as they sought out opportunities in other countries which offered secure income streams.

According to RCA (Real Capital Analytics) data, European malls and shopping centres alone attracted €32.3 billion of investment in 2015, a 47% increase on the €22 billion invested in 2014.

Eri Mitsostergiou, director of Savills European research said: “Dynamic shopping centres, where landlords work closely with their occupiers to create vibrant and stimulating environments to attract and inspire visitors, remain top of investors’ wish lists as retail real estate continues to compare favourably to the volatile equity markets and the low yielding bond markets. There is therefore the potential for investment volumes to climb even higher in 2016 in the context of fairly low interest rates, availability of finance, and improving economic conditions.”

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