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News Release

London

European Retail Real Estate Investment Q1 2011 tops €8 billion

According to figures from Jones Lang LaSalle


London, 27th April 2011 - Direct investment in retail real estate in Europe during the first three months of 2011 reached €8.04 billion, 48 percent up on the same period in 2010 (€5.4 billion). Investment volumes during the first quarter of the year even surpassed Q4 2010 volumes by 21 percent as some key transactions were finalised, such as Capital Shopping Centres purchase of the Trafford Centre in Manchester, UK, for over €1.8 billion. In total, there were 12 transactions during the quarter that traded for more than €100 million across Europe.

The majority of investment activity was focused on the UK and Germany which accounted for 77 percent (€6.2 billion) of total volumes transacted in Q1. Germany continues to be one of the most sought after markets and witnessed over 20 deals, including the €700 million acquisition of 42 Metro Cash & Carry wholesale properties by the US private investor Cerberus.

Sweden witnessed a surge in activity, as pent up demand finally met with the release of product to the market.  Four major shopping centre deals transacted, the largest being the Gallerian and Punkt galleries in Västerås acquired by The Carlyle Group for approximately €96 million from Boultbee.

Shelley Matthews, Director of EMEA Retail Capital Markets at Jones Lang LaSalle commented “Sweden has been high on the target list for many investors for some time now, attracted by excellent economic fundamentals and comparatively strong retail sales performance. This demand is now being met with a steady supply of investment product resulting in a strong Q1 transaction volume which we expect to continue for the rest of the year”.

Shopping centres remained by far the most sought after asset type in the first three months of the year, accounting for 60 percent of total retail volumes traded. This trend was less pronounced in the UK however, where a number of significant supermarket transactions completed, including the purchase of a portfolio of three Sainsbury’s stores by Prupim’s M&G Secured Property Income Fund and the sale and leaseback of 21 Tesco supermarkets for close to €800 million. Similarly, Germany saw increased activity in retail warehousing with approximately €950 million transacted over the quarter compared to €993 million during the whole of 2010.

Jeremy Eddy, Head of EMEA Retail Capital Markets at Jones Lang LaSalle added: “Looking forward to Q2 and Q3 we expect to see a broad base of transactions in most markets, most significantly in Germany and Central Eastern Europe where pipeline deals are matched by strong investor demand.  We also expect to see activity in the growth markets of Turkey and Russia return before the end of the year. Despite this activity much of the yield compression we have witnessed across Europe has now paused until rental and turnover growth prospects improve”.

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Notes to Editors

This research considers all investment sales of shopping centres, retail warehouses and factory outlet centres in Europe.  It excludes the high street and any investment deal less than US$5 million in value.