Aguirre Newman: Inv’t In Shopping Centres Exceeded €1,000M In Q1

4 May 2017 – Expansión

Shopping centres are continuing to capture investor interest and in Q1, retail represented the second most active real estate segment, exceeded only by offices. After a record-breaking year in 2016, with an investment volume of more than €3,500 million, up by 59%, investment activity in this type of asset continued during the first quarter of 2017 to amount to more than €1,000 million, according to a study compiled by Aguirre Newman.

Milestones such as Deutsche Bank’s purchase of the Diagonal Mar shopping centre (Barcelona) for €495 million last August and Intu’s recent acquisition of the Xanadú shopping centre in Arroyomolinos (Madrid) for €530 million have carried this market to historical maximums.

Institutional investment funds account for 52% of the total investment volume, followed by Socimis, with 38%, and then real estate companies and private investors. The forecasts indicate that investors’ interest in this market will continue in 2017, although “it will be hard to achieve the investment volume recorded in 2016 given the lower supply of products for sale”.

Aguirre Newman’s study predicts that around 235,000 m2 of new surface area will be incorporated into the market this year, compared with 273,000 m2 last year. Of the total, 80% will correspond to new supply, whilst the remaining 20% will be generated by the expansion of existing shopping centres.

By autonomous region, Andalucía, Madrid, Valencia and Cataluña account for 55% of the shopping centres in Spain and 58% of the gross leasable area (GLA). By contrast, Cantabria, La Rioja and Ceuta are the autonomous regions with the smallest gross leasable areas, alongside Melilla, which is the only region not to have any shopping centres at all.

In terms of returns, the initial rate required for the best shopping centres will continue to range between 4% and 4.5% although that figure may be lower for certain very unique assets.

According to the study, demand for retail premises from medium and large chains will continue to focus on the best performing shopping centres, whilst small local traders, which have a more limited appeal, will opt for the poorly positioned centres.

Original story: Expansión (R. Arroyo)

Translation: Carmel Drake