North American investment in the European commercial real estate market has seen a considerable upsurge in 2013.
The UK and Germany remained the two largest markets across Europe in the first half of 2013, with transaction values of €5.34 billion and €3.73 billion respectively. While Central and Eastern Europe followed in at third with €2 billion.
In total, North American investment in the retail sector across the continent stood at a net €1.6 billion in the first six months of 2013, which essentially reverses the €1.2 billion withdrawal that was achieved in the whole of last year.
Based on acquisitions alone, North American investment in the region totalled €2.39 billion over the six months, higher than the €2.08 billion invested over the entirety of 2012.
North American investment in UK retail sector is particularly strong, according to the latest CBRE study, and Americans were thinking big: three-quarters of all take-ups were shopping centers. So, it’s no surprise that CBRE notes in its report that, over the last 18 months, investors from the US made record-breaking deals in terms of lot size.
Iryna Pylypchuk, associate director of EMEA research at CBRE, said: "North American investors stayed firmly focused on the shopping center segment, which matches their preference for large deal size and their familiarity with the shopping centre sector. This is very much in contrast to Asian and Middle Eastern capital, which, while acting across a wide range of geographies, has shown a clear preference for high street retail."
The UK retail sector has been particularly active recent, with a number of major projects in the pipeline. In March of this year, Land Securities’ Trinity Leeds development opened in West Yorkshire, and a major project by Hammerson and Westfield to combine and expand two large centers in Croydon, South London has been announce.
The office sector, particularly within London, has also seen increased activity, one major project being British Land’s announcement of £780 million development of new office space in London.
This is one of a number of signs that, after a number of disastrous years, the greater UK market is beginning a rebound. The Construction Products Association estimates that the retail sector is set to grow by 1.5 per cent next year, and while the office market will remain static, both sectors are expected to see speedy growth in 2015, with a 6% rise in retail and even double-digit increase for the office sector predicted.
Consumer confidence and the financial sectors drive the retail and office market, so both can be looked at for an indication of general economic health. By this measure, it seems that while there is still a long way to go, optimism and the early stages of solid growth is finally returning to the European market.
Matt Skinner is the Managing Editor of PropertySales.com. Matt manages content across all titles in the Dynamis stable, including BusinessesForSale.com and FranchiseSales.com, as well as being a regular contributor to industry publications, including Talk Business and Start Your Business magazines.