"While, during the boom years of European real estate, largely European institutions were active to diversify domestic real estate portfolios cross-border and move from direct holdings to indirect funds, now it is encouraging to see Koreans, Chinese and Malaysian investors…seeking to place capital in the European retail segment," Hendrikse says. Target assets for the new fund will be shopping centers dominant in local markets in continental Europe to benefit from the economic recovery that is slowly picking up momentum. "We believe that there are sufficient investment opportunities to support the core-plus targeted returns of the new closed-end fund in the range of 11% to 13% for its seven-year lifetime," he says.

During the financial crisis European retail yields made a huge shift, averaging a move from a peak in value terms of around 5.5% yields to a trough of 8%, with prime stock obviously seeing far less of a swing. "Gross retail yields in some prime markets in France, Germany and the Netherlands have already compressed back toward the places they have been most often in the past, at around 6%, while distressed situations continue to be available at 7.5% to 8%."

The German retail market, which only fell back slightly during the crisis, and the French market, supported by limited supply through lack of development, are best positioned. The top end prime market in southern Europe is only now stabilizing and central and eastern Europe will eventually bounce back because of the dearth of retail supply relative to pent-up demand. "The diversity of the European retail landscape and the differing rates of recovery across markets offer a range of investment opportunities at this stage in the cycle, whether that is in core assets, or core-plus, that need to be actively managed, and also in distressed properties that will be boosted by the upswing in values," Hendrikse says.