Property Times European Shopping Centres 2010 Shift to value-add ...

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Investment marketThe appeal of prime retail as an asset class is mainlydue to the resilience of its strong rental cash flow;particularly in comparison with offices. According toIPD, the income return was slightly higher for retailon a pan-European level with an increase by 6.3%.Despite the economic crisis and the slowdown inconsumption across Europe, major shopping centreshave very low vacancy rates. This makes the retailsector an excellent defensive investment.Risk aversion and market transparency remains anissue in the current investment market; in this context,retail appears as a more transparent risk due to thelink between turnover/rental value and the quickimpact of a qualitative asset management.Prime yields for shopping centres across the majorEuropean markets have been falling since the end of2009. However, the extent of the yield compressionvaries widely by country. Whereas Germany sawyields corrected by only 10 basis points in 2010, UKyields came in by 100 basis points in the same period.Yields for prime shopping centres currently standbelow 6% in France, Germany and the UK, andbetween 6% and 7% in the others major marketsacross Europe, the exception being Istanbul (7.75%)(Figure 19).Figure 19Yields for prime shopping centres in EuropeParisMunichUKBerlinStockholmBrusselsAmsterdamMadridMilanPragueWarsawIstanbulSource: DTZ Research4,00% 6,00% 8,00% 10,00%Beginning 2010 Beginning 2011www.dtz.com 14
Investment marketOutlookWhilst the retail sector recovered well in 2010, theeconomic climate is still fragile, and recentlyannounced budgetary austerity policies are beginningto adversely impact demand. Doubts remain as towhether recovery will be sustained in 2010 or ifrecent improvements merely represent a temporarybounce.There remains a substantial amount of moneytargeting the retail sector and the shopping centresegment in particular, from a wide range of investors.Both prime and secondary assets are in demand,albeit for different reasons and returns expectations.Following the recent significant compression of yields,we expect only very limited further yield compressionacross Europe in the near future. But demand isbeing driven by a lack of pipeline and oversupply insome countries. In this context, investor interest willbe driven by income returns, rather than capitalgrowth, so driving new and improving existingrevenue will be the major part of their strategy. Thus,we can expect to see more redevelopments andrefurbishments.Future investment activity will continue to be drivenby the availability of stock. We expect more influencefrom the banks as they continue to evaluate theirloan books and encourage sales. With many loansdue to be refinanced in 2011, this year will likely seea raft of secondary schemes come onto the marketas borrowers fail to secure new funding.www.dtz.com 15
Page 4 and 5: Economic overviewFigure 6Retail sal
Page 6 and 7: RetailersMany of the larger non-foo
Page 8 and 9: Shopping centre: Existing stock and
Page 10 and 11: Shopping centre: Existing stock and
Page 12 and 13: Investment marketLooking more speci
Page 16 and 17: AppendixMajor expanding brands in t
Page 18 and 19: AppendixUnited KingdomLimited new s
Page 20 and 21: AppendixGermanyLimited new shopping
Page 22 and 23: AppendixFranceLargest shopping cent
Page 24 and 25: Focus on selected countriesSpainThe
Page 26 and 27: Focus on selected countriesThe Neth
Page 28 and 29: Focus on selected countriesNordicsA
Page 30 and 31: Focus on selected countriesPolandRe
Page 32 and 33: Focus on selected countriesHungaryD
Page 34 and 35: DefinitionsShopping centre: Defined
Page 36: DisclaimerThis report should not be

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