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

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