Jones Lang LaSalle reports that retail real estate investment was strong in Q4 2012 lifting full year investment to 19.4 billion; the top end of our 18-20 billion forecast.
Direct investment in retail real estate for Q4 2012 is 7.6 billion compared with 8.5 billion in Q4 2011, down 11%. Full year volumes are estimated at 19.4 billion, in comparison with 31.3 billion in 2011, approaching the five year average of 23.7 billion.
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 1.5 billion transacted as did Norway, reaching 1.3 billion. Including France at 1.2 billion these five major markets totalled 74% of the total volumes transacted across the region in 2012.
Shopping centers were the dominant sector in Q4 with a total volume of 5.3 billion, a significant proportion of which was the 943m purchase of a 50% stake in Meadowhall, Sheffield by NBIM from London & Stamford. Other notable shopping center deals in Q4 2012 include Kista Galleria in Sweden (526 million) purchased by CPPIB and Citycon and Manufaktura in Poland (390 million) 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 globalization 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%."
It is estimated for 2013 that year end volumes will be more or less in line with 2012.