Deals

Retail property investment up 77 percent in Europe

Private equity investors contributed to a €26bn splurge of retail property purchasing in Europe last year as research shows activity was up 77 percent on 2005.

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Global property services firm Jones Lang LaSalle said today that investment in European retail property reached €26 billion ($33 billion) in 2006, far in excess of the €14 billion that was invested in 2005 and more than triple the volume in 2004.

Among the deals highlighted were Merrill Lynch’s acquisition of four shopping centers in Germany for approximately €710 million, Quinlan Private’s purchase of the Diagonal Mar shopping center in Barcelona for €300 million and GE Real Estate’s deal to buy a Polish hypermarket portfolio for €550 million.

The research firm says that more than 200 investors bought retail property in 2006.

Jeremy Eddy, director in European retail capital, called demand “unrelenting,” particularly in Germany, Spain, Poland and Italy. In a statement, he added that “investor interest is moving further east and we have seen the first major transactions taking place in Turkey, Russia, Ukraine, Croatia and the new EU member states of Romania and Bulgaria. The main drivers of this geographical diversification by investors are yield margins and asset management opportunities.”

Germany is the largest market by volume in Continental Europe, followed by Spain and Poland.

Portfolio sales accounted for 40 percent of the total volume with shopping centers the largest property type. The biggest investor overall was ING Real Estate Investment Management, which accounted for 6 percent of volume and 9 percent of all shopping center transactions.

Will Rowson, Head of european acquisitions at ING REIM, commented: “We see the market in 2007 remaining just as competitive as it has been for the past 12 months.”

Apart from Europeans, investors from the US, Australia and the UAE were particularly active.