Global investment in retail real estate is expected to rise, according to Savills, driven by renewed store expansion from retailers in key locations and a return to rental growth in prime markets.
In the UK, high street shop investment jumped 39.2% year-on-year in the first quarter of 2025 to £524m.
Shopping centre investment also surged, hitting £2bn in 2024 — the highest annual total since 2017 and above the eight-year average of £1.3bn.
In its Impacts programme, Savills notes that despite pressures from e-commerce, economic crisis, and global uncertainty, the expected wave of store closures hasn’t occurred. With rents rebased, renewed occupier demand is now driving fresh investment and development.
Oliver Salmon, director, capital markets, Savills world research, said: “There remain some investors deterred by previous forays into retail, and global institutional allocations to retail have dropped from 28% in 2018 to 11% today, but many investors are beginning to look again.
“In 2024, global retail investment was broadly stable, with momentum building in the second half of the year and, supported by some marquee transactions, retail real estate has attracted an increasing share of institutional capital. However, the nuanced recovery requires careful asset selection by buyers.”
Savills notes that asset repricing has created attractive opportunities for investors, with retail yields looking favourable compared to sectors like living and logistics, which remain highly competitive and rely on sustained rental growth.
Also, the limited pipeline of new development across Europe adds to the value of existing retail assets. Prime flagship malls, retail parks, and designer outlets, in particular, continue to deliver strong performance.
Larry Brennan, head of European retail agency, Savills, said: “Right-sizing is also a persistent theme, driving both opportunities and activity.
“The bellwether sectors remain sports and athleisure, along with value fashion brands, which continue to transact the highest volumes of space on high streets and city centre locations. The retail park sector also remains resilient, with limited availability in most markets, backed by very strong levels of demand.”
Image: Via Samantha McClary – Courtesy of Battersea Power Station Development Company
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