BELGIUM / Retail Q1 2023

First shopping centre transaction since 2020

In Q1 2023, 234 MEUR were invested on the retail market. This represents a slight 5% contraction compared to Q1 2022. Close to 30 transactions were recorded, also a slight decline compared to same period last year.

Despite being just below last year levels, we observe growing interest to (re-)invest in the retail sector. This quarter, 18 transactions took place in the High Streets segment for a total of 46 MEUR invested. Most important transactions are namely the acquisition of the Meir 6163 by FICO for 15 MEUR or the purchase of the Rue Neuve 39-43 by Sontag for 13 MEUR. Prime locations confirm the results of our last year survey, highlighting that location is the most important factor for retail investors. Other investment transactions were also recorded in Antwerp, brussels, Waterloo, Namur or Knokke amongst others.

140 MEUR were invested in the Out-of-Town segment this quarter thanks namely to the purchase of a 50% share of the Shopping Pajot by a private investor. Two portfolios transactions are also to mention, the sale & leaseback of 4 Louis Delhaize by Red Rose and the acquisition of 4 different Oh Green stores by SERRIS Reim. Both transactions are estimated to 35 MEUR each. The future sale of the retail park Brixton confirm investors’ interest in this specific asset class

But the biggest transaction this quarter is the purchase of the Grand Bazar Shopping Centre by IRET for an estimated 50 MEUR. This is to mention as this transaction constitutes the first one in the Shopping Centre segment since 2020.

Prime yields stable in Q1 though short-term outlook is negative

No changes to prime yields levels have been observed this quarter compared to the end of 2022. Yields are still around 4.75% in the High Streets, around 5% in the Shopping Centres and 5 8% for Out-of-Town locations

However, short-term outlook is oriented on the increase for the end of the year as the European Central Bank continue to pressure interest rates to try to fight inflation and as financing conditions remain difficult. However, prime yields should remain below 5% for the High Streets and around 6% for Out-of-Town locations. In this context, the location and quality of the asset, combined with the quality of the tenants and the potential redevelopment of the scheme will be key for investors.

In the longer term, the forecasts of the 10-year bond yield shows a relative stability around 2.7% up to the end of 2026. The market should adapt to these new conditions and as a result, we could assist to slight compression of the prime yields in all market segments.