Spain mall sales may hit $1.4 bln in 2011- Savills

Mon Jun 27, 2011 10:37am EDT

* Deal volumes may nearly double their 2010 levels

* More assets coming to mkt, some from banks

* Yields on prime malls seen at about 6.5 pct

By Andrew Macdonald

LONDON, June 27 (Reuters) - Spanish retail property's appeal to investors will linger into late 2011, with more shopping mall assets being sold into an increasingly competitive market, potentially doubling deal volumes to about 1 billion euros ($1.43 billion), research showed.

Property consultancy Savills said Dutch, British and German funds would continue to dominate transactions, having accounted for about 90 percent of the 696 million euros deal volume in 2010.

"About 700-800 million euros is expected to be transacted (this year) but with some investment opportunities totalling 100 million euros alone, a larger total could be achieved," Savills said in a statement on Monday.

Deal volumes could rise to about 1 billion euros by the sale of two malls -- Invest Cos' Marineda City in La Coruna and Acciona's Splau in Barcelona -- that are on the market separately for a total of about 500 million euros, Savills said.

Investment volumes into Spanish malls for the January-May period totaled 165 million euros, Savills said.

Gross yields for prime shopping centres would remain at about 6.5 percent on average, with retail parks and secondary properties achieving gross yields of about 7 percent, it said.

Global property investors have been scouring Spain for discount retail assets for the past year, betting the nation's recession-hurt economy is at or near its nadir and that a gradual return to health will boost prices.

Spain's economy is seen growing by 0.7 percent in 2011 and by 1.4 percent in 2012, a Reuters poll showed.

"Everything points towards the fact that investor activity is improving. The amount of product for sale has increased and investors appear to be more interested in actively participating in the market," Savills said.

"Also, new players on the investment scene could certainly boost investor activity."

Savills said the increasing number of vendors in 2011 would be led by banks divesting assets, followed by local developers and traditional investors.

In April, Reuters reported several investors seeking deals in Spain, among them F&C REIT , Henderson Global Investors , Cerberus Capital , BlackRock , and Unibail-Rodamco .

In the same report, Investment Property Databank research showed commercial property total returns for 2010 hit 4.9 percent, from 2009's negative return of 9.3 percent, the turnaround helped by increased rivalry for cut-price assets. (Reporting by Andrew Macdonald; Editing by Louise Heavens)

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