Valuations
Investment market
European commercial real estate investment markets saw a slight but continuing recovery during 2009 after one of the worst investment downturns in history. Investor confidence has improved from the historic lows at the beginning of 2009 and most economies have returned again to cautious growth. In the second quarter investment volumes in commercial real estate in Europe started to rise again from around € 11.5 to € 13 billion from the first to the second quarter, a 12.5% increase. The momentum was sustained in the third quarter, when an investment volume of around € 17.5 billion was reached - a 35% increase - and continued into the fourth quarter, when the volume of investments reached € 26 billion. Even though the total investment volume of 2009 reached nearly € 70 billion and indicates improving investor sentiment, full year volumes were still more than 40% down from a year earlier level, reaching the lowest level since 2001. Trends across the different markets were mixed: the main focus of renewed investor interest was in markets that had seen the greatest price correction, such as London, Madrid, Barcelona and Paris.
Retail property investments in Europe reached € 4.5 billion in the last quarter of 2009, a quarterly increase of nearly 60% and the highest total since the end of 2008. In the whole of 2009, transaction volume amounted to approximately € 12 billion, which represented a decline of more than 30% compared to 2008. Western Europe accounted for most of the retail investment volume (95%). Activity in Central and Eastern Europe was limited as most investors focused primarily on domestic and core European markets. In Continental Europe retail investment volume reached more than € 7 billion, a year-on-year decline of over 40%. However, towards the end of 2009 activity picked up, with total volumes in the fourth quarter 2009 reaching € 2.5 billion, almost 40% higher than the third quarter of 2009. With access to debt financing remaining restricted across most European markets, many of the larger deal makers have successfully turned to vendor financing.
The UK, Germany, Italy, Spain and France dominated the retail investment market in Europe, with each seeing over € 1 billion worth of deals transacted. In The Netherlands the transaction volume amounted to just under € 1 billion, with no transactions above € 100 million. Germany was the most active market in Continental Europe with a 20% share of total investments.
Shopping centres were the principal target for investors in 2009, with a continued focus on prime product in core Western markets. Notable transactions in 2009 included Pramerica’s acquisition of ‘Le 31’ shopping centre in Lille for approximately € 160 million in the second quarter, Corio’s acquisition of 95% of shopping centre Príncipe Pío in Madrid from Colonial for € 126.5 million and Orion’s acquisition of Plenilunio Park in Madrid from Banif for approximately € 235 million, also in the second quarter.
Source: Annual Report 2009, Chapter Review of Operations, page 43 (PDF, 6.362 kB)
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