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Union Investment Real Estate’s recent closure of one of the largest shopping centre acquisitions of the year earns it the top position in PropertyEU’s ranking of retail real estate in Europe this year.

In October, the company finalised the purchase of a controlling stake in Manufaktura shopping centre, located in the Polish city of Lodz, for EUR 390 mln. The German fund manager has invested at least EUR 760 mln in European shopping centres this year, according to our analysis of reported transactions. Overall, Union Investment had spent at least EUR 1.1 bn in Europe during 2012, with the lion’s share going to the retail segment and at least EUR 390 mln going to offices.

After Manufaktura, the investor’s next two largest shopping centre deals took place in Germany. They were the mid-sized malls Europe Gallery Shopping Centre in Saarbrücken which was acquired for some EUR 170 mln and Sophienhof in Kiel, bought for EUR 150 mln.

Judging from the ranking all investors with significant equity resources want exposure to Germany’s scarce pool of prime retail assets. There is a particular appetite for the largest assets of 90,000 m2-plus, whether already open or at the development stage.

Take for example US pension giant TIAA-CREF which is ranked second with almost EUR 700 mln of investment. TIAA-CREF teamed up with developer Mfi (now controlled by Unibail-Rodamco) in an 80-20 joint venture to acquire the 93,000 m² Gropius Passagen in Berlin for EUR 341 mln. Then in September, the pension fund for teachers bought the 200-store Festival Place in Basingstoke, UK for a similar amount.

Another example of a joint venture ownership involves German closed-end fund manager Hamburg Trust buying a controlling stake in the Milaneo shopping centre project in Stuttgart for EUR 400 mln. German developer-investor ECE retained 22%. ECE, a private company controlled by ICSC chairman Alexander Otto and his family, company teamed up with Austria’s Strabag to acquire the Kaiserplatz-Galerie retail project in the west German spa town of Aachen for EUR 240 mln.

In another trend, sovereign wealth funds are displaying their substantial spending power at the top-end of the retail segment. Veteran real estate investor Qatar Investment Authority paid EUR 500 mln for a luxury retail complex on Paris’ exclusive Champs-Elysées boulevard. Though a relative newcomer to direct real estate investment, Norway’s oil-fuelled pension fund has also taken part in some of the largest transactions in the last 12 to 24 months.

Aside from investing more than EUR 1 bn in two major office portfolios in Paris, the fund’s most recent deal was the acquisition of a 50% stake in Meadowhall shopping centre in Sheffield in October. The centre, in which British Land holds the other 50%, is valued at EUR 1.8 bn.

The Norwegians’ first venture into real estate came into 2010 when it bought a chunk of retail on Regent Street in London from the Crown Estate for over EUR 500 mln.

The full Deal Watch apears in the November issue of PropertyEU. Click on the link below to subscribe: