2008.1 2008.2 2008.3 2008.4 2009.1 2009.2 2009.3 2009.4 2010.1 2010.2 2010.3 2010.4 2011.1 2011.2 2011.3 2011.4 2012.1 2012.2 2012.3 2012.4 2013.1 2013.2 2013.3 2013.4 2014.1 2014.2 2014.3 2014.4 2015.1 2015.2 2015.3 2015.4 2016.1 MARKETVIEW Europe Retail Investment, Q1 2016 Retail investment drops to 10 billion in Q1 following five quarters of exceptional turnover -44% -40% -38 bps -38 bps Figure 1: European Retail Investment Turnover ( billion) 20.0 18.0 16.0 14.0 1 10.0 8.0 6.0 4.0 0.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Source: CBRE Research Quarterly Total (LHS) Rolling 12 Mo.Total (RHS) Total retail investment dropped to 10.1 billion in Q1 2016 after the sustained bull run of transactions since Q4 2014. There was a fall in transactions in the rest of the commercial property market, but that was not as severe as in the retail sector. A lack of investable stock has been a key factor in the fall in investment turnover. Investors risk-off attitude around the turn of the year when there was concern over economic growth, volatility in equity markets and rising bond yields was another factor driving both the decline in turnover as well as the lack of movement in secondary yields. Notable was the fall away in large transactions. Deals for 100 million or over had been running at well over 50% of the total in 2015, but dropped back to 47% of the total in Q1 2016). The slowdown in activity was seen in all the retail subsectors. Shopping Centres were 39% of the total and retail warehouses 20%, in both cases in line with the recent average. There was no real geographic pattern, although with the exception of Norway the Nordic markets beat the trend, with retail investment in Sweden, Denmark and especially Finland holding up well. Italy also beat the slowdown with turnover in Q1 2016 higher than in any quarter in 2015. The UK and Germany, Europe s two largest retail investment markets, saw a lot less retail investment than in recent quarters, although they retained those top two positions. Prime retail yields continued to fall in Q1, but at - 5 bps for High Street Retail and -2 bps for Shopping Centres, the yield shift was much slower than in 2013/15. Q1 2016 CBRE Research 2016 CBRE Ltd. 1
UK Nordics Germany France Spain Other* Italy CEE Benelux MARKETVIEW COUNTRY TRENDS Figure 2: Retail Investment by Country 100% UK Germany France Spain Nordics Italy Benelux CEE Other* 80% 60% 40% 20% 0% 2010 2011 2012 2013 2014 2015 2016 * Other includes Austria, Greece, Ireland, Portugal and Switzerland Figure 3: Retail Investment by Market / Region, ( billion) 7.0 6.0 5.0 4.0 3.0 1.0 0.0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 * Other includes Austria, Greece, Ireland, Portugal and Switzerland Q1 2016 CBRE Research 2016 CBRE Ltd. 2
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 MARKETVIEW CROSS-BORDER INVESTMENT Figure 4: Investment in European Retail by Investor Domicile, ( billion) 20 18 16 14 12 10 8 6 4 2 0 42% 25% 31% 32% 37% Cross-border Purchasers Local Purchasers 48% 40% 39% 34% 32% 49% 38% 29% 33% 46% 45% 36% 46% 40% 50% 42% 50% 48% 50% 44% Figure 5: Cross-Regional Investment in European Retail 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Domestic Intra-Regional Cross-Regional Figure 6: Cross-border Investment in Retail, Q1 2016: By Buyer Nationality (%) 3% 5% 15% 27% USA UK Germany UAE 8% France 9% 18% Canada Netherlands 15% Others Q1 2016 CBRE Research 2016 CBRE Ltd. 3
MARKETVIEW SOURCES OF INVESTMENT Figure 7: Buyer Mix by Value (%), Q1 2016 Institutional Fund 15% 7% 6% 21% Property Company (Listed/REIT) Property Company (Other) German Funds UK Funds 12% US Funds 10% 9% 10% 10% All Other Collective Vehicles Private Other Figure 8: Net Investment in European Retail by Investor Type, Q1 2016 ( billion) 2.5 Purchases Sales Net Investment Activity 1.5 1.0 0.5 0.0-0.5-1.0-1.5 All Other Collective Vehicles Institutional Fund US Funds German Funds UK Funds Property Company (Listed/REIT) Private Property Company (Other) Developer Q1 2016 CBRE Research 2016 CBRE Ltd. 4
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Basis Points Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Basis Points MARKETVIEW PRICING AND CAPITAL VALUES Figure 9: Average Prime Yield Indices Q2 2015 Q3 2015 Q4 2015 Q1 2016 EMEA Average Prime High Street Yield(%) 4.42 4.35 4.22 4.16 Quarter-on-quarter Shift (bp) Year-on-year Shift (bp) EMEA SC Average Prime Yield (%) Quarter-on-quarter Shift (bp) Year-on-year Shift (bp) 13 7 13 5 41 40 46 38 5.26 5.13 5.03 5.02 14 13 9 2 39 41 47 38 Figure 10: Eurozone High Street Retail - Prime and Secondary Yields Spread (rhs) Shops - Prime (lhs) 9 8 7 6 5 4 3 Shops - Secondary (lhs) 3.5 3.0 2.5 1.5 1.0 0.5 - Figure 11: Eurozone Shopping Centres - Prime and Secondary Yields 8 8 7 7 6 6 5 5 4 4 3 Spread (rhs) Shopping centres - prime (lhs) Shopping centres - secondary (lhs) 2.5 1.5 1.0 0.5 - Q1 2016 CBRE Research 2016 CBRE Ltd. 5
MARKETVIEW MARKET ANALYSIS Figure 12: Retail Investment Activity by Country Market Turnover( m) Q1 2016 Q1 2015 Change on Quarter(%) Q1 on Q4 Change on Year (%) Q1 on Q1 UK 2,802 6,019-42 -53 Germany 1,479 3,668-64 -60 France 1,039 996-39 4 Finland 964 407 249 137 Spain 803 1,415 80-43 Italy 570 172 12 231 Sweden 427 824-16 -48 Netherlands 375 164-52 128 Portugal 320 25 4 1154 Ireland 254 36-53 607 Czech Republic 202 694 101-71 Other Western Europe 532 1,954-73 -73 Other CEE 336 431-82 -22 Europe* 10,102 16,806-40 -44 Q1 2016 CBRE Research 2016 CBRE Ltd. 6
MARKETVIEW MARKET ANALYSIS (CONTINUED) Q1 2016 CBRE Research 2016 CBRE Ltd. 7
MARKETVIEW EUROPE CAPITAL MARKET CONTACTS CBRE OFFICES EMEA CAPITAL MARKETS CONTACTS Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.