European real estate transactions in the retail sector totalled €4.5bn from 100 deals in Q4 2009, nearly 60% higher than the €2.9bn achieved from 66 deals in Q3 2009 according to Jones Lang LaSalle.

However, there was a 32% decline compared to the 2008 total of €18.2bn, as 2009 only reached a total of €12.3bn over the full year.

JLL predicted in 2008 that the UK, Germany, Italy and France would continue to dominate the retail investment market in Europe each seeing over €1bn worth of deals transacted. The most active market in continental Europe was Germany with 21% of total volumes transacted. France and Italy meanwhile both saw a total volume of approximately €1.2bn during 2009, with France seeing just over €500m in Q4 alone.

Jeremy Eddy , JLL head of European retail capital markets, said “We are expecting a strong start to H1 2010 across Europe with an increasing trend of equity partnering with expertise in joint ventures and property clubs. This will enable equity players to access markets and opportunities while allowing REITS and property companies to stretch their constrained equity, enlarge their European footprint and generate fee income. Much of this equity will remain focused on the prime-end of the market and we envisage continued weak pricing for secondary assets as pricing has yet to move out to meet the pricing returns of opportunistic buyers, a significant group in this sector of the market.”

Shopping centres remained the principal target for investors in 2009, constituting 56% of all retail transactions in Europe. In comparison retail park investment declined considerably from €2.5bn in 2008 to €526m in 2009 due to a lack of high quality stock and the increased cost of finance.

Adrian Peachey , JLL head of UK retail capital markets, said: “Recovery in pricing and liquidity of shopping centres continued in the second half of 2009 driven by the demand and supply imbalance. The question remains how long can this recovery be sustained; we believe prime assets are being slowly rebased and should hold relatively firm. The window of opportunity for brave sellers of dominant secondary schemes will remain during the start of 2010. However, an increase in the numbers of bank sales could dilute the supply and demand imbalance and this coupled with a fragile occupational story could put an end to inward yield shift in the more secondary centres.”