A move toward European retail

Abstract

Purpose – This report aims to examine the sectoral composition of Europe's real estate investment market, the factors likely to drive a shift in portfolio composition away from the office sector and toward retail, and how this will likely occur.Design/methodology/approach – The article examines the sectoral breakdown of Europe's real estate market and describes the shift in the UK's sectoral breakdown over the past two decades. Economic convergence in Europe, the increasing number of third‐party fund managers offering access to the performance of retail assets, the historically superior risk‐adjusted returns of retail in mainland Europe are noted as factors that will drive the shift. Eight mechanisms that could help achieve the shift are described.Findings – Many investors in European real estate are modifying strategy to capitalise on the expected outperformance of the office sector over the short to medium term. However, as the office rental recovery matures and the potential for outperformance diminish...