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News Release

Warsaw

European Retail Real Estate Investment Volumes Reach €20.6bn in 2010, Up 68% year-on-year

According to Jones Lang LaSalle Research


Warsaw, 25th of January 2011 – Direct investment in retail real estate in Europe during 2010 reached over €20.6 billion, representing a 68% uplift on 2009 (€12.3 billion), according to Jones Lang LaSalle. 150 transactions were recorded in Q4, accelerating total volumes to €6.7 billion, almost 80% up on Q3 and comfortably the busiest period of the year.

Over the course of the year, the European retail real estate market saw approximately fifty deals of at least €100 million, together totalling just under €10 billion, half of the annual total transacted. Twenty of these were completed in Q4 - most notably the British Land acquisition of Drake Circus shopping centre in Plymouth, UK, for over €275 million in December and Rockspring’s €224 million purchase at the end of October of a 51% stake in O’Parinor shopping centre, Paris; Jones Lang LaSalle advised on both transactions.

The UK closed 2010 as strongly as Germany started, enjoying its busiest period since the end of 2007 with investment volumes surpassing the €2 billion mark in Q4.
Overall the UK accounted for 31% of Europe’s total volume in 2010, with Germany adding a further 23%. The Netherlands and France together transacted €1.4 billion during Q4 bringing their combined total for the year to €4 billion, with both markets maintaining their momentum throughout the year. Poland continued its strong performance from Q3, transacting €677 million during the final quarter of the year and cementing its place as the fifth largest retail investment market in Europe during 2010. One of major transactions concluded last year was a disposal of Promenada Shopping Centre in Warsaw by Carpathian PLC. The shopping centre was acquired by Atrium European Real Estate for around Euro 170 million. Jones Lang LaSalle advised the seller.

Speaking about the strong performance of the UK during 2010, Adrian Peachey, Head of UK Retail Investment at Jones Lang LaSalle, said: “In the UK retail real estate investment has been dominating performance with volumes encouragingly surpassing levels recorded in 2009 and topping the €6.5 billion mark, with shopping centres accounting for almost 50% of all retail investments. Prime assets continued to be the most coveted. For other assets investors paid increasing attention to retailer performance to ascertain the quality of potential tenants to ensure rent flows. The key investment trend in the UK was the 'flight to quality' for all retail assets which forced a strong rebound in prices at this end of the market. As a result values for secondary assets outside of key towns and cities are recovering at a slower rate. The interesting factor is that all stock of varying qualities has attracted a good number of equity and leveraged buyers at competitive rates .There was a bubble of stock in October but everything is now firmly under offer or sold”.

Agata Sekuła, Head of Retail Investment CEE at Jones Lang LaSalle commented, “In 2010 we have observed increased investors’ interest in retail products and numerous deals completed. Poland was a preferred country in CEE and on top of various investment transactions such as sale of Promenada shopping centre in Warsaw, sale of Arkadia and Warszawa Wilenska in Warsaw, Ferio in Konin, Jantar in Slupsk or Galeria Malta in Poznan, some investors were also keen to set up a more complicated deal structures such as forward funding or development joint ventures that attracted no demand in 2009 at all.