Europe is now emerging from the economic crisis and main economic indicators (GDP, retail sales and consumer spending) are now forecast to return to positive territory over the next five years. The European countries will record different speed and size of recovery. The UK, CEE and Nordics are leading the economic recovery while France is losing some ground and is now expected to underperform the European trend. By contrast, Southern Europe is returning to growth, however, high unemployment rates will remain a concern, especially in Spain.
Investment volume grew by23% in H1 2014 to EUR 72bn of which EUR 19.7bn was in the retail sector. Investors demonstrated strong appetite for retail assets especially in the UK (EUR5.9bn) and Germany (EUR5.2bn) which accounted for 30% and 27% of this volume respectively. France and Southern Europe posted the biggest increase in volume over the six first months with EUR3bn of acquisitions recorded for each in H1 2014.
Market players have continued to favour shopping centre assets which accounted for more than half of retail investment volumes recorded in H1 2014, in line with the trend noticed in 2013. The UK shopping centre market was extremely buoyant, accounting for 31% of the European volume. Volumes recorded both in France and in the Southern Europe have been higher than in Germany, reflecting a strong rebound in activity.
Domestic investors were dominant both in the retail and shopping centre market and accounted for 59% of the acquisitions recorded in H1 2014. On the cross- border side, non-European investors have favoured the Southern European countries where they have by far dominant.
Funds remained the most dominant player in the retail and shopping centre investment markets, covering all lot sizes. However, the most interesting trend came from the listed sector posting a strong rebound on the buy side in H1 2014. By contrast, institutions and sovereign wealth funds have remained far from the retail and shopping centres segment in the first half year of 2014.
Going forward, we expect the current momentum in the market to continue over the rest of the year 2014 and in 2015 with investment volumes expected to reach EUR155bn in 2014 and EUR165bn in 2015. The retail sector and specifically shopping centre market should continue to welcome growing capital flows from inside and outside the region with investment volume reaching EUR44bn in the full year of 2014 out of which EUR25bn to be invested in shopping centres.
