Jones Lang LaSalle reports that retail real estate investment was strong in Q4 2012 lifting full year investment to €19.4bn; the top end of our €18-20bn forecast.
Direct investment in retail real estate for Q4 2012 is €7.6bn compared with € 8.5bn in Q4 2011, down 11%. Full year volumes are estimated at €19.4bn, in comparison with €31.3bn in 2011, approaching the five year average of €23.7bn.
Geographically, the UK and Germany remained the largest markets in 2012 with 30% and 23% market share respectively. In third place, Sweden had a very strong finish to the year with €1.5bn transacted as did Norway, reaching €1.3bn. Including France at €1.2bn these 5 major markets totalled 74% of the total volumes transacted across the region in 2012.
Shopping centres were the dominant sector in Q4 with a total volume of €5.3bn, a significant proportion of which was the €943m purchase of a 50% stake in Meadowhall, Sheffield by NBIM from London & Stamford. Other notable shopping centre deals in Q4 2012 include Kista Galleria in Sweden (€526m) purchased by CPPIB and Citycon and Manufaktura in Poland (€390m) purchased by Union Investment, both advised by Jones Lang LaSalle.
Commenting upon the strong year recorded in Sweden, Antony Pastiroff, Head of Retail Capital Markets Sweden, Jones Lang LaSalle said: “The consistent level of investment volumes over the last few years and the high number of international buyers further underline the strength of the Swedish retail market. Sweden remains resilient to the economic malaise being witnessed across many European markets, which makes it a desirable location for new retailer entrants and investors alike.”
Adrian Peachey, Head of Retail Capital Markets UK, Jones Lang LaSalle, commented:
“The purchase this quarter of Meadowhall Shopping Centre, Sheffield, by NBIM and Festival Place, Basingstoke, by TIAA CREF in Q3 underline the attractiveness that the UK retail market still holds for foreign investors despite the current economic headwinds. The UK is one of the main beneficiaries of the globalisation of the retail investment market, second only to the US in terms of all direct retail investment over the past three and a half years, accounting for 14% of all global investment in that period, ahead of Germany’s 10%.”
Our estimate for 2013 is that year end volumes will be more or less in line with 2012.