According to Savills latest research, European retail investment volumes reached €19 billion for Q1 to Q3 2024, marking a 6% increase compared to the same period last year.
Five European countries significantly exceeded their five-year investment average, led by Ireland (+107%) and Italy (+83%). This was followed by Hungary (+34%), the UK (+8%), and the Czech Republic (+1%). Italy’s performance was bolstered by Kering's €1.3 billion acquisition of Via Montenapoleone 8 in Milan. In Ireland, investment was mainly driven by the sale of The Square shopping centre for €130 million as well as the trading of a few retail parks.
In terms of sectors, retail parks represent 28% of total European retail investment volumes in Q1-Q3 2024, followed by shopping centres (26%) and high street retail (18%). The latter was driven by sales of prime trophy assets such as Via Montenapoleone 8 in Milan or 251 rue Saint-Honoré in Paris.
As of Q3 2024, the European average prime retail warehouse yield stands at 5.9%, reflecting a 4 bps decrease year-on-year. Mass-market high street yields also compressed by 4 bps annually, reaching 5.2%. Luxury high street yields remain stable at 4.4% compared to the previous year, while the European average prime shopping centre yield increased by 9 bps annually, and now stands at 6.3%.
James Burke, Director, Global Cross Border Investment at Savills, says: “The really positive story across Europe is the increasing number of retail assets coming to market, generating strong investor interest. The availability of larger lot sizes and portfolios is broadening the pool of potential buyers, with institutional and cross border investors becoming increasingly active. Additionally, market fundamentals look promising: improved occupancy rates, a return to rental growth, and a lack of new development projects suggest that income returns should remain attractive in the near term.”
Lydia Brissy, Director European Research at Savills, says: “Based on deals signed since early October and those in the pipeline, we project Q4 retail investment volumes to reach approximately €8.5 billion. This would bring 2024 year total numbers to just over €27.5 billion, a 15% increase on 2023 volumes.”