Uncertainty in global economies will lead to the ‘Big Five’ European countries recapturing investment market share in 2009, says new research by Jones Lang LaSalle.
France, Germany, Italy , Spain and the UK have seen their market share of the total European retail investment volume trade slump from 80% in 2004 to 45% in 2008, said the research released at MAPIC, the international retail conference, in Cannes.
‘Investors are now focusing on real estate with strong defensive qualities and are increasingly considering fundamentals such as market, location, scale, tenant covenant, merchandising and quality, and we believe that shopping centres in the more mature and larger western European economies offer these qualities,’ said Neville Moss, Jones Lang LaSalle’s head of European retail research.
The research also said that the restrictive planning regimes in the ‘Big Five’ meant they have been defended from over supply.
‘The aggressive investment market seen between 2003 and 2007 resulted in the convergence and homogenisation of yields across Europe as an ever-increasing weight of capital drove down returns in mature markets and investors sought new geographies to meet their requirements,’ said Jeremy Eddy, head of European retail capital markets.
‘This yield convergence was witnessed across sub-sectors as the market failed to adequately price the differing risk profile of prime and secondary retail product.
‘We therefore expect to see a return to polarisation of yields across both geographies and indeed sub-sectors and risk profiles.’