European retail real estate investment grew to EUR 36.2 bn in 2010, representing a 60% increase year-on-year, and well above the 47% increase for the investment market as a whole, according to the latest research by CB Richard Ellis (CBRE).

European retail investment activity was heavily concentrated on core assets and markets, reflecting the risk-averse strategies and the type of investors active. Geographically, the UK and Germany together accounted for 63% of total retail investment, with France and the Netherlands being the next most liquid markets last year.

The growing influence of institutional, core capital, translated into a further spike in shopping centre demand, also boosting liquidity for large transactions. A total of 63 EUR 100 mln-plus deals were completed in 2010, which have been either shopping centres or long-term sale-and-leaseback deals - another bi-product of the downturn.

‘Recent years have seen a significant surge of investor demand for prime, good quality retail,’ said John Welham, Head of European Retail Investment, CBRE. ‘However, over the last few months there has been notably more evidence of investors actively looking for value-add opportunities across many European locations.’

One reason for this is the significant yield premiums on offer for investors prepared to move away from prime, he said. ‘The shortage of new development, combined with limited capital investment in existing assets in recent years, also makes asset repositioning strategies particularly attractive in the retail sector.’