Savills: Volume of high street investment deals in continental Europe causes yields to harden (EU)
Tuesday 20 November 2012
According to research by international real estate advisor Savills, the number of high street investment deals has increased from less than 5% of total retail investment in 2007 to 37% in the first three quarters of 2012 in the top eight continental European markets. This has caused yields for high street investments to harden to 4.27%, which is the lowest they have been since 2007.
The research covers Belgium, Germany, France, Italy, The Netherlands, Spain, Sweden and Poland and shows that in total there has been a significant increase in high street investments since 2009, driven in particular by a jump in transactions in France and Germany in this sector, which account for 90% of the high street deals above €10 million in the survey area.
Eri Mitsostergiou, director of European research, comments: “The rising interest in this sector has been driven by private, equity rich investors who believe the prime high street will outperform inflation and hold its capital value in the long term. It is also no coincidence that the majority of these deals are concentrated in France and Germany, which are considered safer markets by investors due to healthier national public finances and consumer sentiment.”
Savills reports that there were a total of 188 retail investment deals completed across all retail property types in the countries surveyed during the first three quarters of 2012; this is approximately 52% of the total number of commercial property deals closed in 2011 in these areas. The total value of retail investment sales in the eight continental European markets up to Q3 2012 is approximately €9.8 billion.
Aside from the high street, the firm found that investment volumes for the shopping centre market accounted for 30% of the total of all retail investment transactions during the first three quarters of 2012, which is down 42% from 2007. Average prime shopping centre yields are now at 5.6%, which is a decrease from the peak in 2009 of 6.15%.