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Retail property investors may resume activity in Europe during the second half of 2009 when several markets are expected to be nearer fair value, Jones Lang LaSalle has said in a new research report.

Jeremy Eddy, a director in the European Retail Capital Markets team, said: 'Investors have been adopting a 'wait and see' strategy, due to the high cost and/or lack of access to finance, and the anticipation that prices have further to fall. The low level of activity is likely to persist in the first half of 2009 but markets are moving closer to fair value and by mid year more purchasers are expected to take advantage of the revised pricing.'

Eddy said buyers will continue to focus on the best asset. 'And for the first time, there is likely to be significant opportunities to access prime product as developers look to raise cash and bring loan-to-value (LTVs) to more manageable levels. A major upturn in investment activity will of course be dependent on an increase in the liquidity in the debt markets.'

The research shows retail real estate transaction volumes in Continental Europe totalled EUR 1.5 bn in the final quarter of 2008 - just over half the third-quarter volume (EUR 2.9 bn). The total volume of transactions in 2008 was EUR12.4 bn, down 56% on the previous year (EUR 28.2 bn), a significant fall but only slightly lower than the 2005 total volume of EUR 14.7bn.

Jones Lang LaSalle said the significant decline in investment activity in recent months has resulted from the ongoing difficulty in accessing finance, a worsening economic outlook and rising yields. Nevertheless, there were still 40 deals completed in the final quarter (66 in the Q3), including three over EUR 100 mln. This compares to 30 deals over EUR 100 m in 2008.

The largest was the sale-and-leaseback of 12 Eroski Hypermarkets in Spain to UK investor Topland for EUR 361 mln.