Retail real estate is struggling but looking for capital

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It gives in but does not collapse. Retail real estate bends but doesn’t break (shopping malls and parks, outlet malls, luxury high streets). And it is trying to capture new opportunities among investors looking for new asset allocations, in an economic framework that is trying to finance new development and in which the certainty of real estate investments that seemed to be made (see the “offices” item) is showing. cracks. Post-Covid, the sector is focused on revival: ESG investments to reduce costs and emissions, rethinking the offer (less shopping and more services). How to “ground” it all is at the center of discussion among operators at Mapica, the retail real estate fair that started yesterday in Cannes and ends tomorrow.

RETAIL INVESTMENT IN EUROPE

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According to data from BNP Paribas, the volume of retail investment in Europe in the third quarter of this year reached 28.9 million euros compared to the same period last year: -44 percent. Significant decline, but still “minor” compared to -58% office and approximately -60% logistics. Not only. The data shows that the asset class – which was in an identity crisis long before the pandemic hit – is gaining market share rather than losing it, barring the downturn. Also in the third quarter of 2023 (compared to the same period in 2022), its market share rose from 15 to 19% in relative terms, while offices fell from 37 to 31% and logistics from 24 to 20 percent. Although in absolute terms volumes remain lower than traditionally stronger asset classes, it has returned to the second “most popular” asset class in France and Germany since 2018.

“The rebalancing of asset allocations is taking place across Europe – explained Filomena Conceição, Global Head of Business Development at Nhood – opening up prospects for growth in retail also for investors who have never (or only marginally) considered an asset class that has always been a privilege highly specialized operators and has always been perceived as ‘riskier’ than others, able to offer higher margins and less unpredictability’.

“All asset classes are now about credit,” said Sandra Ludwig, head of retail markets for the EMEA region at JLL, “which is reflected in retail both in the growth of speculative capital and in added value, which has been little present in this segment until now.” and in deals of lower value below 500 million euros”.
60% of investments are made in France, Germany and the UK, mainly due to a faster price adjustment that has been picked up by more opportunistic investors.

“In Italy – added Roberto Limetti, executive director of Pradera (which has around 20 shopping centers and parks in Italy) – on the one hand, there remains inflexibility on the part of the seller regarding the price that does not meet the buyer’s requirements. Compared to the revaluation that is already happening in other countries, it is difficult to be competitive. On the other hand, Italian retail traditionally lacks institutional investors (banks, insurance companies, pension funds), because the asset class is perceived as riskier. In Spain, 50% of retail investment is made by national entities. In France and Germany, we exceed 80 percent.”

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