European retail investment reached €19bn (£15.9bn) over the first three quarters of 2024, a 6% increase year-on-year, with industry analysts expecting the year-end total to outperform to an even stronger degree.
Five European countries exceeded their five-year investment average by the end of September, led by Ireland with a 107% increase and Italy up 83%. This was followed by increases of 34% for Hungary, 8% for the UK and 1% for the Czech Republic, according to Savills. Retail parks accounted for 28% of regional investment, followed by shopping centres at 26% and high street retail at 18%.
Based on deals signed since early October and those in the pipeline, Savills now projects fourth-quarter retail investment to reach €8.5bn. That would bring 2024’s total to just over €27.5bn, a 15% increase on 2023.
By the end of the third quarter, the European average prime retail warehouse yield stood at 5.9%, a slight year-on-year decrease. Mass-market high street yields also fell over the year to 5.2%. Meanwhile, luxury high street yields held steady at 4.4%. In contrast, the European average prime shopping centre yield rose to 6.3%.
Big deals announced in the last quarter included Landsec finalising a deal to purchase an additional 17.5% stake in the Bluewater shopping centre in Kent from Singaporean sovereign wealth fund GIC for £120m and Abrdn buying the Tandem Centre retail park in Colliers Wood, SW19, from LaSalle Investment Management for £60.8m.
James Burke, director in the global cross-border investment team at Savills, said: “The really positive story across Europe is the increasing number of retail assets coming to market, generating strong investor interest.
“The availability of larger lot sizes and portfolios is broadening the pool of potential buyers, with institutional and cross-border investors becoming increasingly active. Additionally, market fundamentals look promising: improved occupancy rates, a return to rental growth and a lack of new development projects suggest that income returns should remain attractive in the near term.”
Photo © Westend61/REX/Shutterstock
Send feedback to Shifali Gorka
Follow Estates Gazette
