Despite the challenges faced by the retail sector in many European countries, there has been a remarkable increase in retail investment across the region. This surge in investment is largely driven by changing consumer behavior, with companies pouring funds into retail properties to adapt to the evolving market landscape. The online revolution, especially impacting the fashion industry, is a major catalyst behind the increased investment in key markets.
According to Savills’ recent European Retail Investment Report, the retail sector in Europe witnessed a total investment of €21 billion by the end of Q3, marking an 8% year-on-year growth. Countries like Belgium, Poland, and Italy experienced significant boosts in retail property investment, with growth rates reaching 229%, 80%, and 52% respectively. Core markets such as France and Germany also saw notable increases in investment, with France recording a 23% rise and Germany a 15% increase.
Germany, leading in total investment share at 24%, has seen a notable uptick in retail warehousing investment to support the booming e-commerce industry. Shopping centers remain a top investment category, with Italy and Poland experiencing the largest increases in investment in this sector. The UK and Germany have dominated in investments in warehouses and retail parks, commanding a sizable portion of the market share.
The retail landscape in countries like Britain and Germany is undergoing rapid changes, with the fashion sector transitioning to online platforms and brick-and-mortar stores facing challenges. Larger shopping centers, popularly known as ‘supermalls,’ are thriving, and fashion tenants are increasingly gravitating towards retail parks. Despite these shifts, the rise in consumer confidence and private consumption growth predicted for the upcoming years could potentially benefit prime high street assets in select countries such as France, Spain, and the Netherlands.
Eri Mitsostergiou, a European research analyst, highlighted the intriguing trend of prime high street opportunities in markets where online retail has not yet fully taken off, like France and Spain. Investors are eyeing quality high street units in locations with high footfall and tourist traffic as a defensive strategy against the growing dominance of online retail. As consumer behavior continues to evolve and the retail landscape transforms across Europe, investment trends in the retail sector are being reshaped.
For further reading on trends in the European retail sector, you can check out this article and this report.
