European retail property investment grew to €9.4 billion in the final quarter of 2011 (Q4), bringing the annual total to €37.2 billion. The defensive characteristics of good quality retail assets continue to attract local and international investor demand despite an uncertain economic and political environment. As a result, retail in 2011 generated a large share of the overall commercial real estate investment across many European markets, growing to just above last-year’s record of 32 percent on the pan-European level.
As has been the case throughout the last few years, capital flows continue to favour Europe’s stronger and faster growing economies, with Germany and some of the Nordic and Central and Eastern European (CEE) markets seeing robust activity levels. Germany continued to gather pace in 2011 with just under €11 billion deals transacted for the year as whole. The German retail market has seen a remarkable growth in activity – tripling in size since 2009, while the retail share of the overall commercial property investment jumped to 48 percent in 2011, up on the 42 percent recorded last year.
Iryna Pylypchuk, Associate Director, EMEA Research, CBRE, commented: “Off the back of stronger economic growth and occupier markets than elsewhere in Europe, Germany, the Nordics, and some CEE markets have been the biggest beneficiaries of investor demand, especially when it comes to international capital looking for new retail opportunities. In an uncertain economic and political environment, investor strategies will remain risk-averse and we expect the defensive strategies will put even greater investor focus on good quality retail assets.”
John Welham, Head of European Retail Investment, CBRE, commented: “Going forward, as the retail segment of commercial real estate grows further, some of the CEE markets will become extremely attractive from both an economic and pricing perspective. One step removed from the eurozone crisis, these younger economies offer further potential, especially as Russia becomes more of an international market, with investor interest broadening beyond Moscow and Saint Petersburg.”