Retail property investment activity has decreased in the UK in the first half of 2011 as firms look to other European nations for expansion possibilities, new research has found.
Faster growing economies such as Germany, Poland, Russia and the Nordics are increasing their market share of European investment, although the UK still represents the lion’s share.
According to analysis by property firm CB Richard Ellis (CBRE), European retail property investment reached €20.1 billion (£17.6 billion) in the first six months of 2011, and the UK made up 36 per cent of this activity during this period.
This is well down on the historic UK average of 45 per cent, and its closest competitor Germany managed to increased its investment to 31 per cent of the European share or €6.2 billion.
Iryna Pylypchuk, Associate Director EMEA Research at CBRE, said: “The respective fortunes of the German and UK markets is particularly interesting. These two heavyweights typically account for close to 70 per cent of total European retail investment, but are entering very different phases.
“The sharp decline in retail investment witnessed in the UK is in stark contrast to the robust activity levels seen in Germany. Germany saw only €900 million less activity than the UK in H1 2011 – the closest the retail investment turnover between the two countries since the first half of 2006.”
Poland became the third most active retail investment market in the continent during H1 with €1.2 billion transacted, whilst more cross-border buyers from outside of the Nordics has seen a sharp rise in this region – in particular in Sweden.
Another sign of a drop in real estate activity in the UK retail sector came yesterday from another study from CBRE which showed that shopping centre development had fallen to its lowest levels since the early 1990s.
More than half the total shopping centre space being completed this year is accounted for by the new 1.9 million sq ft Westfield Stratford centre in east London, and CBRE predicts that the current pipeline total of around 60 million sq ft to fall to about 40 million sq ft over the next three to four years.
Mark Disney, Shopping Centre Development & Leasing Director at CBRE, commented: “Retailer demand is increasingly focused on larger shopping centres, but the lack of new development is limiting opportunities.
“We are seeing strong demand for new space in schemes such as Westfield Stratford, but demand is also strong for space in established major shopping centres like Bluewater, Meadowhall, and the Trafford Centre.
“After the current hiatus in the pipeline, we expect that a flow of new schemes will begin to be delivered to the market from 2015/2016 onwards.”