According to the latest figures from Jones Lang LaSalle, European retail property investment volumes reached €10.3 billion in the first half of 2013, up 40% from €7.3 billion in the same period previous year.
Retail real estate investments totaled €5.1 billion in the second quarter of this year, up from €4.1 billion the previous year, owing to an increase in market stock. lusail city map
"We are witnessing a growing presence in the market of opportunistic investors, as evidenced by KKR's first acquisition," said Jeremy Eddy, JLL's director of European retail capital markets. "Looking at the regional trend, there are a lot of deals in the pipeline in Southern Europe, which will provide much-needed signposts and increased investor confidence, building market momentum as we move forward."
According to JLL, North American investor KKR joined the U.K. retail warehouse market by buying a 40,000-square-foot retail park portfolio from Resolution Property for €130 million in partnership with asset manager Quadrant Estates.
Investor interest is spreading across Europe, with the United Kingdom, France, and Germany in particular reporting "strong" investment activity. According to JLL, active quarters were found in Sweden, Poland, Italy, Portugal, Slovenia, Austria, Russia, and Turkey.
Investors are diversifying their portfolios and placing a higher value on property fundamentals. The purchase of Silesia City Center in Katowice, Poland, by an international consortium led by Allianz Real Estate for €412 million was one of several big transactions signed during the quarter.
According to the research organization, joint venture agreements are becoming more common in the retail sector. In general, the firm anticipates more investor interest in the coming months.
"We predict more activity from these investors in the second half of the year as the amount of financing accessible to the property market increases," Mr. Eddy added.
Foreign investors are driving the commercial boom in Europe.
According to the latest data from CBRE Group, the overall value of commercial real estate investment activity in Europe increased by 22% year over year in the second quarter, led by North American and Middle Eastern investors.
During the second quarter, investment activity was €32.6 billion (US$42.4 billion), the highest second-quarter total since 2007.
Foreign buyers accounted for 44 percent of all sales by volume in the first half of 2013, compared to 40 percent in the second half of 2012.
According to CBRE, the source of cross-border investment has switched from within Europe to outside Europe. During the first six months of 2012, non-European investors accounted for 28% of all transactions, compared to 19% in the second half of 2012.
North American buyers, primarily from the United States, upped their investments in the first half of the year. During that time, the group accounted for 13% of the total market and 24% of cross-border transactions. Middle Eastern investors upped their activity as well, accounting for 9% of the overall market and 21% of cross-border transactions in the first half.
Direct institutional investment, headed by sovereign wealth funds, pension funds, and insurance firms, has increased from 9% of the entire market in 2007 to 26% in the first half of 2013.
"Despite the fact that investment market revenue in H1 2007 was nearly twice that recorded in the last six months, institutional groups invested more in absolute terms in H1 2013 than in H1 2007, just prior to the financial crisis," Jonathan Hull, head of EMEA Capital Markets, CBRE, said in the release. "When paired with the increase in institutional lending activity, this demonstrates the significant increase in real estate allocation by institutional investors."
While foreign commercial investment increased, major transactions increased in Europe. 134 commercial investment projects for €100 million (US$130.0 million) or more accounted for 47% of total revenue in the first half, compared to 28% in 2009.
"Buyers from outside the region have traditionally been interested on larger-than-average assets, and H1 2013 was no exception," Mr. Hull said.