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New report from JLL & Union Investment highlights growing grocery real estate market, with the share of European grocery real estate investment as a proportion of total retail real estate investment reaching 22% in 2020, up from 6% in 2016.
The European grocery real estate market has remained resilient in the face of economic uncertainty, as the COVID-19 pandemic provided new opportunities for growth and increased investor appetite. This development could contribute to a return of the retail sector in the real estate investment market, a trend that is also making its presence felt in Romania.
The retail sector has lost interest from investors in recent years to the detriment of office and industrial projects. The Romanian investment market has been no exception, being dominated by office transactions over the last 6 years. In 2019, 23% of the volumes were with retail spaces, and in 2020 the share decreased to only 4%.
"The success of food retail networks and therefore the schemes anchored by these types of stores can also be seen in the retail turnover data, which grew by 2.2% in 2020 mainly due to a 5% increase in food sales. At the same time, the last year has marked the rise of retail formats operated by local companies, such as DCN EU or La Cocoș, which have successfully positioned themselves in a market authoritatively dominated by international toys. The excellent performance of these stores will certainly attract the attention of investors who have funds available for retail projects", said Andrei Văcaru, Head of Capital Markets JLL Romania.
According to ‘The European Grocery Real Estate Market’ a new report, by JLL and Union Investment, the grocery real estate market, which attracted €6.7bn of the capital flows targeting retail real estate in 2020, is set to continue to flourish through 2021.
The report findings show that real estate investors have historically under-allocated capital towards grocery real estate assets, accounting for only 10% of Europe’s overall retail investment volumes, on average, between 2014 and 2020. In comparison, grocery stores have attracted 37% of the total retail consumption in the EU (27 countries) in 2020.
The sector’s resilience during the pandemic has led net initial yields for quality grocery stock in Europe’s key retail markets continuing to see compression, demonstrating increased investor appetite.
Although there is still uncertainty around the long-term implications of the pandemic, the report seeks to identify longer term trends that will affect the grocery real estate market:
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About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion, operations in over 80 countries and a global workforce of operations in over 80 countries and a global workforce of more than 91,000 as of December 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.