Retail investing across Europe set to get competitive in 2022

Following years of turmoil in retail, 2022 will bring rental growth and increased investment capital to the sector across Europe, according to Savills. The international real estate advisor said that the retail sector is better prepared for changes in consumer habits, while strong retail repricing – which has moved +80bps on average in Europe in the past four years – means retail assets are one of the most competitive real estate sectors. 

The report forecasts that prime retail warehouse yields will compress further by 5-10bps on average during the next 12 months, following a 4bps compression in the average prime retail warehouse yield in the last two quarters (to 5.2 percent). It added that shopping center yields may start stabilizing during 2022, after a 3bps increase to 5.3 percent.

Savills estimates that the end-year volume will be around €288 billion, a 9 percent increase y/y, and a similar total volume of around €290 billion in 2022.   

“The resumed investor activity is also evident in Poland, where investors follow global trends and growth patterns, looking for stable returns and growth opportunities in order to protect the capital against inflation, as well as for ESG compliance. Industrial is still in the spotlight with offices right behind. There is also a recovering interest in retail, with a particular focus on convenience, standalone supermarkets, and retail warehousing, nevertheless, due to limited supply of relevant investment products, the retail sector accounts for less than 14 percent of the investment volume. A balanced position of shopping centers and more attractive shopping center yields are conducive to the return of investment capital to the retail sector,” Michał Stępień, Associate, Investment, Savills Poland, said.

(WBJ)