|
"At a briefing held today at MAPIC, ING Real Estate, the property investment, finance and development firm, launched its European Retail View, giving an overview of the diverse retail property markets across Europe, and highlighting individual markets where it believes the potential for retail growth and investment exist.
Key findings of the research confirm general market sentiment; that retail sales across the board are likely to remain flat and may decline in some markets. That said, there are sectors, and European regions which will buck the trend, such as Central and Eastern Europe where retail sales growth is projected to remain positive, and demand for retail space remains high – particularly in the Czech Republic, Poland, Slovakia and Romania. Prospects in Portugal also look relatively buoyant, as retail sales are still on the rise; while Finland, too, may also have potential owing to its reliance on exports to Russia, where economic growth is still strong.
With regard to property type, the prime high street retail and prime shopping centres may prove the most resilient sub-sector of the market, as retailers aim for the best units in the best locations. Consequently, ING Real Estate expects rental levels to remain firm in most prime markets, before picking up by 2010.
Not surprisingly, the retail property investment market has been hit hard, with total volumes – as at the third quarter of 2008 – almost halving compared to the same period for last year.
Prospects for Southern Europe (Italy, Spain and Portugal)
Although retail sales volumes have declined slightly in Italy, developers – on the back of reasonably strong consumer confidence - have continued to open new retail complexes. Consequently, Italian retail stock expanded by 2.6% in the first half of 2008.
Not surprisingly, the top market rents have been achieved in regional shopping centres located mainly around the most important cities in Northern and Central Italy, where, after years of rental growth, ING Real Estate expects to see prime retail rents stabilising until 2010.
In Spain, consumer confidence is worsening rapidly, and this, combined with a considerable retail supply pipeline coming on-stream from the second half of 2008, is likely to reduce rental growth. However, there is still strong interest in Spain’s shopping centre investment market, a sector which is attracting the eye of many overseas investors as distressed sales are creating new opportunities to acquire prime retail assets at large discounts.
Portugal, on the other hand, is faring relatively well; consequently, ING Real Estate expects rental growth in Portugal to outstrip growth in Spain in the coming year.
In spite of the fact that economies across Europe are coming under increasing pressure and growth in prime retail rents will come down in the next two years, this does not mean that European property has lost all of its appeal as an asset class.
There is still equity waiting to get back into European retail real estate, and even in turbulent markets, opportunities can be identified: there is, for example, an abundance of capital waiting to be invested by equity-rich investors and a growing number of funds, seeking opportunities to buy distressed or re-priced assets". (CS della Società)
|
