Publications

- January 1, 2022: Vol. 16, Number 1

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Prime shopping centres most attractive sector for 2022

by Marek Handzel

Prime shopping centres are forecast to become the most attractive real estate asset class in 2022, according to AEW’s European Annual Outlook study for 2022.

The manager projects prime shopping centres to have the highest returns (7.4 percent annually) of any sector in the next five years, due to their attractive current yields and projected yield tightening. Prime shopping centre yields have widened by 120 basis points since 2018. As the COVID-related re-pricing did not differentiate between prime and average-quality, AEW expects prime yields to compress by 30 basis points by 2026 to reflect the resilience of the best assets. It believes that Spanish and regional UK shopping centre markets stand out among the top performers in Europe in terms of risk-adjusted returns.

After 2018, prime shopping centre rental growth turned negative as the retail subsector was hit hard by the growing share of online sales, which caused many retailers to shift from quantity to

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