The retail market has built upon the strong performance of 2003 and in the first six months of 2004 the market has seen strong demand for major shopping centers in Europe. Of the total investment in all commercial property, shopping centers accounted for €6.8 billion or over 15%, of investment transactions in the enlarged EU. The UK was once again Europe’s most active shopping center investment market, accounting for around 50% of all transactions (€3.4bn).
So far this year, shopping centers have also featured well in continental Europe with 85 centers totaling approximately €3.4 billion being sold. This notably includes the largest portfolio acquisition of 2004, the sale of METRO’s holdings in Poland for €750 million to Apollo Rida. European shopping center investment on the continent has also compared well to other sectors. The total value of shopping center investments exceeded that of industrial (€1.4bn), other retail investments (€2bn) and equated to over 30% of all Continental European office investments (€10.6bn) over the same period.
The number of centers traded in Continental Europe has picked up significantly over the past four years from an annual average of less than 35 to over 85 in the first half of this year alone. The average shopping center transaction continues to be in excess of €30m per center. The high levels of investment activity for 2004 have been boosted by significant portfolio transactions and activity in Central Europe.
Retail property returns continued to rise and according to the latest IPD index for Europe, retail was the best performing sector in 2003. Due to the performance and popularity of the shopping center sector for investors across Europe, good quality assets are becoming increasingly scarce. Commercial property investment in shopping centers is however forecast to reach record levels this year, as private investors, investment funds and property groups compete to purchase assets.
Source: CB Richard Ellis