economic marketbeat snapshot - cover · vehicles and motorcycles) fell 1.6% year-on-year in october...

PAN-EUROPEAN

RETAIL SNAPSHOTS

MARKETBEAT

A Cushman & Wakefield Research Publication

Q4 2011

1. Austria

2. Belgium

3. Bulgaria

4. Czech Republic

5. Denmark

6. Finland

7. France

8. Germany

9. Greece

10. Hungary

11. Ireland

12. Italy

13. The Netherlands

14. Norway

15. Poland

16. Portugal

17. Romania

18. Russia

19. Serbia

20. Slovakia

21. Spain

22. Sweden

23. Switzerland

24. Turkey

25. United Kingdom

Cushman & Wakefield LLP 43-45 Portman Square London W1A 3BG www.cushmanwakefield.com/knowledge

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. Should you not wish to receive information from Cushman & Wakefield LLP or any related company, please email [email protected] with your details in the body of your email as they appear on this communication and head it “Unsubscribe”. ©2012 Cushman & Wakefield LLP. All rights reserved.

OVERVIEW The Austrian economy expanded by 2.7% year-on-year in the third quarter, although consumer spending has continued to lag behind investment and external demand. According to the Austrian Institute of

Economic Research (WIFO), retail sales volume (excluding motor vehicles and motorcycles) fell 1.6% year-on-year in October and 1.2% in September. Textiles, clothing and footwear saw a particularly steep decline in sales, with volume falling 4.2% year-on-year in October and 12.0% in September.

OCCUPIER FOCUS Demand for new retail space continues to outstrip supply. However, most retailers are cautious when taking decisions on new openings or expansions, evaluating units/schemes and competition carefully before establishing a presence; interest is generally focused on large units in prime locations. Rents were unchanged over the quarter across all sub-sectors. Shopping centre and retail warehouse rents have been stable since the first quarter, when values went up by up to 5-10% in some locations. Prime high street rents have held firm since Q4 2008, with the exception of Kärntnerstrasse, where moderate growth was recorded in 2009 and 2010.

While supply is limited, retail space is still available, although prospective occupiers have to contend with elevated key money. Provision in the capital improved in the fourth quarter following the opening of BahnhofCity Wien West. Availability will be boosted further in Autumn 2012 with the opening of G3 Shopping Resort in Gerasdorf, on the north-eastern outskirts of Vienna.

INVESTMENT FOCUS Investment activity remains constrained by limited supply, with no notable retail transactions recorded in the fourth quarter. Retail investment volume in 2011 totalled €114 mn, a slight increase on the €110 mn recorded in the previous year. Much of the total is accounted for by Bank of Austria Real Invest’s purchase of two shopping centres in Q1. Prime yields were unchanged over the quarter across all sub-sectors.

OUTLOOK Economic growth is expected to slow in 2012, and austerity measures are likely to impact on purchasing power. However, a stable labour market and low interest rates should support occupiers, and the outlook for the retail market is generally stable.

MARKET OUTLOOK

Prime Rents: Prime rental values should remain unchanged in the short term.

Prime Yields: Yields expected to remain stable across all sub-sectors.

Supply: Limited, although provision set to increase in Autumn 2012 with the opening of G3 Shopping Resort.

Demand: Strong demand for prime properties but limited interest for secondary products.

PRIME RETAIL RENTS – DECEMBER 2011

HIGH STREET SHOPS € SQ.M/MTH

€ SQ.M/YR

US$ SQ.FT/YR

GROWTH % CAGR 5YR 1YR

Vienna (Kärntnerstrasse) 275 3,300 398 10.1 0.0

Vienna (Mariahilferstrasse) 135 1,620 195 6.2 0.0

Graz 105 1,260 152 5.6 0.0

Linz 115 1,380 166 12.1 0.0

Salzburg 120 1,440 174 9.3 0.0

Innsbruck 100 1,200 145 17.3 5.3

RETAIL PARKS € SQ.M/MTH

€ SQ.M/YR

US$ SQ.FT/YR


Vienna 11.50 138 16.6 2.8 0.0

Graz (West) 10.00 120 14.5 2.1 0.0

PRIME RETAIL YIELDS – DECEMBER 2011

HIGH STREET SHOPS (FIGURES ARE GROSS)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Vienna (Kärntnerstrasse) 4.25 4.25 4.50 5.20 4.25

Vienna (Mariahilferstrasse) 4.75 4.75 5.00 6.00 4.75

Graz 5.00 5.00 5.00 6.00 5.00

Linz 5.00 5.00 5.50 6.00 5.00

Salzburg 5.00 5.00 5.00 5.60 4.50

Innsbruck 5.25 5.25 5.50 5.80 5.00

RETAIL PARKS (FIGURES ARE GROSS)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Vienna 6.25 6.25 6.25 7.50 5.00

Graz (West) 6.50 6.50 6.50 8.30 5.50

SHOPPING CENTRES (FIGURES ARE GROSS)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Austria 6.10 6.10 6.10 7.00 5.80 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

Source: Cushman & Wakefield

AUSTRIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW Following a further revision to the Q2 estimate (0.4%), preliminary data from the National Bank of Belgium points to a stagnation in Q3 economic growth quarter-on-quarter. Meanwhile, data from Eurostat

confirms a third contraction in annual retail sales growth, with November sales declining by 3.3%.

OCCUPIER FOCUS Austerity measures, primarily through higher taxation, are having an adverse impact on consumer spending, translating into lower turnovers. Demand is still healthy for properties in prime locations in all retail sub-sectors, with several international fashion brands signing leases in recent months; however, secondary pitches continue to struggle as occupier interest remains limited.

On the supply side, development activity has been largely subdued, with few schemes coming to the market. Three large shopping centre projects are in the planning stage in northern Brussels, but are nonetheless experiencing some difficulties in obtaining permits. Indeed, projects across the country are encountering obstacles at different government levels, with mobility and local planning issues increasingly used as reasons for permit refusals.

INVESTMENT FOCUS Buoyed by a marked improvement in sentiment, the investment market recorded a very positive Q4, with €211 mn worth of retail assets being traded, the largest total volume in two years. Higher activity was underpinned by the acquisition of the Galéries Saint Lambert shopping centre in Liège by CBRE Global Investors from Credit Suisse for about €110 mn. Other notable deals included the sale of Ardennes Outlet for €20 mn by Allfin from Comer, the acquisition of a number of retail warehouse properties by Retail Estates from the developer Vanhee for €32 mn, and the purchase of a high street unit in Gent by Groep Tans for €40 mn. Prime yields remained unchanged over the quarter, with the all-retail prime value at 5.00%.

OUTLOOK There is a new government in place but against a backdrop of uncertainty in the eurozone and worsening economic forecasts, consumer confidence deteriorated sharply over Q4 as this index fell to its lowest figure (-14) in almost two years, before recovering slightly (-12) in December. Given the actual bids for investments, yields are expected to sharpen by some 25 bp for several cities.

MARKET OUTLOOK

Prime Rents: Prime rents expected to come under some downward pressure.

Prime Yields: Yields expected to sharpen in several cities.

Supply: Some large projects at the planning stage, but in most cases harder to obtain permits.

Demand: Demand likely to be affected by lower turnover and fragile consumer sentiment.


HIGH STREET SHOPS € SQ.M/YR

US$ SQ.FT/YR


Brussels 1,800 217 2.6 0.0

Antwerp 1,800 217 4.4 0.0

Liege 1,100 133 2.4 0.0

Ghent 1,550 187 4.4 0.0

Bruges 1,200 145 2.7 0.0

Hasselt 1,100 133 3.0 0.0

STAND ALONE RETAIL WAREHOUSING UNITS

€ SQ.M/YR

US$ SQ.FT/YR


Brussels 175 21.1 1.2 2.9

Antwerp 150 18.1 0.0 0.0


HIGH STREET SHOPS (FIGURES ARE NET)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Brussels 5.00 5.00 5.00 6.25 4.25

Antwerp 5.00 5.00 5.00 6.25 4.25

Liege 5.75 5.75 5.75 7.00 5.00

Ghent 5.25 5.25 5.25 6.50 4.75

Bruges 5.25 5.25 5.25 6.50 4.75

Hasselt 5.50 5.50 5.50 6.75 5.00

STAND ALONE RETAIL WAREHOUSING UNITS (FIGURES ARE NET)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Brussels 6.25 6.25 6.25 7.75 5.60

Antwerp 6.25 6.25 6.25 7.75 5.60

SHOPPING CENTRES (FIGURES ARE NET)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Belgium 5.50 5.50 5.50 6.50 4.50 NOTE: Volumes below €5 million may result in sharper yields . With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


BELGIUM

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011

mailto:[email protected]



OVERVIEW GDP increased by 1.6% year-on-year in the third quarter, accompanied by falling unemployment. Retail sales, however, have continued to decline. Sales volume (excluding motor vehicles, motorcycles and

fuel) decreased by 6.7% year-on-year in November and 4.6% in October. Sales of audio and video equipment, hardware, paints, glass, and household appliances recorded a particularly large fall, declining by 14.2% year-on-year in November. Cosmetics, medical goods and toiletries continued to buck the trend as sales grew 8.2%.

OCCUPIER FOCUS Prime rents were stable over the quarter across all sub-sectors. Several major international players are still in expansion mode, focusing on prime pitches in Sofia, Varna and Burgas. However, trading conditions are unlikely to improve in 2012, and most retailers remain cautious. Many high-street locations are experiencing falling demand, with many landlords offering incentives to attract tenants.

Shopping centre occupancy in Sofia is relatively high and the market is stable. However, supply is expected to increase in 2012 folowing the opening of Paradise Center (80,000 sq.m GLA) and Bulgaria Mall (33,000 sq.m), which may put rents under downward pressure. Availability will also increase in Burgas, with Galleria Burgas (37,000 sq.m) and The Strand (30,500 sq.m) in the pipeline, while in Stara Zagora, City Mall Stara Zagora (20,900 sq.m) is under construction and due in 2012.

INVESTMENT FOCUS No major retail transactions were recorded in the fourth quarter. Prime yields were unchanged across all sub-sectors, on both a quarterly and an annual basis. Big-box schemes continue to attract a relatively healthy level of interest, as they are seen as a stable investment in challenging economic conditions.

OUTLOOK A significant improvement in consumer spending is unlikely in the coming months, and most retailers expect a challenging year ahead. Occupier demand will remain subdued and highly selective, and will be largely driven by food and discount retailers and selected international fashion brands. Supply outstrips demand, and rents may come under downward pressure in the coming months as new shopping centres come onto the market.

MARKET OUTLOOK

Prime Rents: Downward pressure likely, with supply outstripping demand.

Prime Yields: Expected to remain stable.

Supply: More than 200,000 sq.m of new space scheduled for completion in 2012.

Demand: Limited, largely focused on the capital.



€ SQ.M/YR

US$ SQ.FT/YR


Sofia (Vitosha Boulevard) 50.0 600 72.4 -14.6 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Sofia (Vitosha Boulevard) 9.00 9.00 9.00 15.00 6.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Bulgaria 9.00 9.00 9.00 10.50 7.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-20.0%

-10.0%

0.0%

10.0%

20.0%

4.00%

6.00%

8.00%

10.00%

12.00%

Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

AVERAGE YIELDS (left) RENTAL GROWTH (right)

BULGARIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW According to the Czech Statistical Office, GDP in Q3 contracted marginally by 0.1% quarter-on-quarter, but rose by 1.2% on the same period last year. Strong demand for Czech exports was again the main

driver of growth, while consumer spending remained depressed. However, working day adjusted retail sales in Q4 were largely positive, edging up by 1.5% in October and 0.5% in November year-on-year. The latest development came on the back of stronger sales in the automotive sector and double-digit growth in mail order and internet sales.

OCCUPIER FOCUS Occupier demand is evident for established and relatively strong shopping centres; however, it tends to fall off for secondary schemes. While prime rents in the two premier shopping centres of the country rose over the quarter, values elsewhere remained stable. Dominant centres have been able to gain further market share, while the expansion trend witnessed in successful schemes such as Avion Ostrava and Centrum Centrum Černý Most continues.

On the supply side, development of new projects is being restricted by the limited availability of bank financing. Nevertheless, three new shopping centres are scheduled to open this year, namely: Nová Karolina in Ostrava, Breda & Weinstein in Opava and Prior Olomouc, while Futurum Hradec Králové is now expanding.

INVESTMENT FOCUS A backlog of investor demand from 2009-2010 translated into stronger retail focus in 2011. Investors were generally seeking assets with a strong position in their respective markets and activity was mainly centred outside the capital. Nevertheless, the fourth quarter saw a sharp fall in investment, with trading volumes totalling €101 million, some way off the record figure registered in Q3. The two most important transactions were the acquisition by CPI of City Park Jihlava shopping centre for €86 million from Central Europe Investment, and the purchase of Beroun Retail Park.

OUTLOOK Economic headwinds in the form of depressed consumer spending and anaemic growth are expected to persist, while ongoing sovereign debt concerns in the eurozone may curb trade with the country’s main importers, adversely affecting the main contributor of GDP growth. Nevertheless, prime rental and yield values are expected to hold up.

MARKET OUTLOOK

Prime Rents: Prime retail rents to remain stable.

Prime Yields: The downward trend witnessed in 2011is expected to peter out, with values stabilising.

Supply: Pipeline limited by financial restrictions.

Demand: Retailers to retain a cautious outlook, waiting for a lift in turnover before expanding.



US$ SQ.FT/YR


Prague (Wenceslas Square / Na Příkopě) 2,040 246 0.4 3.0

Brno (Svobody Sq.) 840 101 1.0 2.4 RETAIL PARKS €

SQ.M/YR US$

SQ.FT/YR GROWTH % CAGR 5YR 1YR

Prague 120 14.5 -1.3 -4.8

Brno 100 12.1 -1.0 -2.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Prague (Wenceslas Square / Na Příkopě) 6.00 6.00 6.25 10.50 5.00

Brno (Svobody Sq.) 7.25 7.25 7.75 12.50 6.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Prague 7.50 7.25 7.75 12.00 6.15

Brno 8.00 8.00 8.25 13.00 6.40


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Czech Republic 5.75 5.75 6.25 9.25 5.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%



CZECH REPUBLIC

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW Following the Q2 rebound, the economy contracted again in Q3 on the previous three months as GDP fell by 0.5%. This fall was, however, lower than most forecasts and in terms of annual comparisons GDP in

Q3 actually edged up by 0.1%. Nevertheless, retail sales growth in November continued to disappoint, with the third consecutive month of negative annual growth (1.8%), preceded by an even sharper decline in October (3.7%). The latest development was prompted by a sizeable decrease in clothing (9.0%) and food and groceries sales (2.6%).

OCCUPIER FOCUS Trading conditions in the country remain challenging as consumers become increasingly conservative about their spending. However, while interest for non-regional schemes is declining, occupier demand for prime Copenhagen space remains unchanged and interest in prime regional shopping centres is still strong. Prime rents remained stable over the quarter.

On the supply side, the CBD area of Copenhagen is currently being renovated. Some of the most important pedestrian streets are undergoing a period of revitalisation, which are expected to attract a number of high street retailers keen to relocate to the area.

INVESTMENT FOCUS Investment market activity in the country came to a virtual standstill in Q4 as no transactions were recorded. This is in contrast to an otherwise very active 2011, with the year seeing a total of €948 mn worth of retail assets being traded. The largest acquisition of 2011 was the purchase of a high street unit on Strøget, Copenhagen for €220 million. The property, which consists of 40,300 sq.m of GLA and houses the Illium department store, was purchased by a joint venture between MGPA and Partners Group. Prime retail yields remained unchanged over the quarter.

OUTLOOK The retail landscape in 2012 is expected to be shaped by the fragile economic conditions and conservative consumer outlook. Consumer sentiment fell again in December, confirming the downward trend which began in July. Nevertheless, various government stimulus measures to be implemented in 2012 are expected to alleviate some of the concerns. Additionally, lower inflation and a stable unemployment rate are anticipated to provide a further boost to the occupier market.

MARKET OUTLOOK

Prime Rents: Expected to remain largely stable.

Prime Yields: Yield stabilisation anticipated for prime locations.

Supply: Apart from the aforementioned renovations in Copenhagen, development is subdued.

Demand: Demand to stay unchanged.


HIGH STREET SHOPS Dkr SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Copenhagen 17,000 2,287 276 1.2 6.3

Aarhus 4,750 639 77 -1.0 0.0

Odense 3,600 484 58 -2.1 -5.3



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Copenhagen 5.00 5.00 4.50 6.00 3.00

Aarhus 5.25 5.25 5.00 6.50 4.25

Odense 5.75 5.75 5.50 7.50 4.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Denmark 6.00 6.00 6.00 6.00 4.25 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%



DENMARK

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW Preliminary data from Statistics Finland shows the economy expanded by 2.7% year-on-year in the third quarter. Retail sales have continued to grow: volume (excluding motor vehicles and motorcycles)

increased by 1.9% year-on-year in November, 1.5% in October and 2.9% in September, with a particularly strong performance from the information and telecommunication equipment segments.

OCCUPIER FOCUS Prime rents were stable over the quarter across all sub-sectors. Demand for high-quality retail space remains strong, with interest focused on Helsinki CBD. Several international retailers are considering opening their first stores in Finland, although activity is constrained by a lack of available high street space in the capital. Prime high street rents in Helsinki and Tampere are currently at record levels. In-town shopping centre rents in Helsinki reached record levels earlier this year, but edged down over the third quarter as new supply came onto the market. Secondary shopping centre rents appear to have stabilised after coming under slight downward pressure earlier this year.

INVESTMENT FOCUS Retail investment volume totalled €143 mn in the fourth quarter. In 2011, €298 mn of retail assets were transacted, a 54% decline on the previous year’s total of €650 mn. Although there is a high level of interest for core properties, activity is constrained by a lack of supply. Yields were stable over the quarter across all sub-sectors.

OUTLOOK The economy is expected to slow in 2012, and consumer confidence has been declining since March. As such, any further growth in retail sales is likely to be modest. Going forward, demand for prime retail space should remain healthy, albeit increasingly selective, with interest focused primarily on Helsinki CBD. The outlook for rents and yields is generally stable. Availability of quality retail space in the capital will improve slightly in the coming months, with a number of in-town shopping centre renovations nearing completion. However, the new space coming onto the market should be absorbed quickly, and prime shopping centre rents are not expected to fall any further.

MARKET OUTLOOK

Prime Rents: Expected to remain stable, although growth is possible on the top high streets.

Prime Yields: Should remain stable.

Supply: Slight improvement in the capital; elsewhere, several schemes in the pipeline for 2012/13

Demand: Demand for prime high street and shopping centre space will remain healthy, but selective.



€ SQ.M/YR

US$ SQ.FT/YR


Helsinki 160 1,920 232 5.1 0.0

Turku 60 720 87 -3.0 0.0

Tampere 82 984 119 1.8 2.5



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Helsinki 5.00 5.00 5.25 6.50 5.00

Turku 6.25 6.25 6.25 8.75 6.20

Tampere 6.25 6.25 6.25 8.75 6.20


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Finland 5.00 5.00 5.50 6.25 4.30 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4.00%

5.00%

6.00%

7.00%

8.00%



FINLAND

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW The occupier recovery which began at the end of 2010 was largely preserved in 2011, underlined by the strong performance of luxury retailers, the expansion of several international brands and various openings

by new players. However, the market remains conditioned by the need to control occupancy costs and the risks intrinsic to new locations. Indeed, the majority of retailers exercised caution, maintaining an opportunistic business model.

OCCUPIER FOCUS The strong momentum on the high street was retained in the fourth quarter, particularly in the prime spots of Paris where record visitor numbers, combined with strong growth in spending and the opening of several high-end hotels, translated into a thriving luxury segment. The shopping market continues to be afflicted by lower footfall, with clothing retailers particularly affected by excess supply and savvier consumers. Established regional schemes situated in Île-de-France and other main urban areas remain the most attractive locations, with the largest centres in the country consolidating their position. New shopping centres are generally struggling to attract occupier demand, and providing an innovative marketing mix has become vitally important. Such difficulties are in contrast to the recovery in the retail park market, which despite a slowdown in autumn, was aided by broader and more balanced demand than in 2010.

INVESTMENT FOCUS Activity in the fourth quarter was particularly brisk as trading volumes exceeded €1.7 bn, the highest total since 2007. Indeed, 2011 proved a very dynamic year for the investment market, with €3.3 bn invested in retail assets. Some investors were anxious to refocus on their core business, pursued portfolio disposals and sale-and-leaseback transactions. In addition, the repeal of Article 210 E of the French General Tax Code served to stimulate business towards the end of the year. Supply, however, remains scarce and investors have turned their attention to more liquid assets such as offices, while those specialising in retail are redeveloping existing schemes or investing in shopping centres.

OUTLOOK Against a backdrop of austerity measures, subdued labour market and sovereign debt crisis concerns, conditions in the sector are expected to be challenging. Although some retailers may be forced to slow their expansion plans, others will have to reconsider their location strategy. Such an environment is anticipated to foster the creation of new concepts, also spurred by increased competition from online retailers.

MARKET OUTLOOK

Prime Rents: Falls in selected shopping centres, but prime retail values expected to remain largely stable.

Prime Yields: Yields stabilisation anticipated.

Supply: AAA supply increasingly scarce.

Demand: Demand expected to wane on the back of a tougher economic landscape.


HIGH STREET SHOPS Zone A € SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Paris 11,000 8,100 977 3.0 10.0

Lyon 2,000 1,473 178 2.1 0.0

Marseille 1,800 1,326 160 2.4 0.0

Bordeaux 2,000 1,473 178 4.6 0.0

Strasbourg 2,000 1,473 178 7.4 0.0

Lille 2,000 1,473 178 2.1 0.0

Toulouse 2,000 1,473 178 4.6 0.0

Nice 2,000 1,473 178 4.6 0.0

RETAIL PARKS € SQ.M/YR

US$ SQ.FT/YR


Paris Region 180 21.7 -1.1 0.0

SHOPPING CENTRES € SQ.M/YR

US$ SQ.FT/YR


Paris Region 2,000 241 2.1 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Paris 4.50 4.50 4.75 6.50 4.00

Lyon 5.25 5.25 5.50 6.75 4.75

Marseille 5.25 5.25 5.75 7.00 4.75

Bordeaux 5.25 5.25 5.75 7.50 4.75

Strasbourg 5.25 5.25 5.75 7.75 4.75

Lille 5.25 5.25 5.75 7.75 4.75

Toulouse 5.75 5.75 6.00 7.75 4.75

Nice 5.75 5.75 5.75 7.00 4.75

RETAIL PARKS (FIGURES ARE NET)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Paris Region 5.75 5.75 6.25 8.75 5.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Paris Region 4.75 4.75 5.00 5.75 4.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


FRANCE

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW According to the latest figures from the Federal Statistical Office (Destatis), GDP grew 3.0% year-on-year in 2011. On the whole, consumer sentiment remains relatively strong, supported by rising

employment, although the indicator of consumers’ willingness to buy softened in December. Retail sales volume (excluding motor vehicles) increased by 0.9% year-on-year in November, following a fall of 0.4% in October and a rise of 1.4% in September. Indeed, 2011 has been a mixed year, with growth recorded in some months and moderate declines in others.

OCCUPIER FOCUS Several major international retailers are in expansion mode, and there is considerable interest for prime pitches in the Top Seven cities (including Cologne and Stuttgart). There is growing interest from Central and Eastern European retailers, several of whom are looking to enter the German market.

Availability on the top high streets is limited, leading to further rental increases in selected locations over the fourth quarter, although growth has slowed considerably after the double-digit rises seen in Q2. Prime shopping centre rents also came under upward pressure, rising by up to 3% over the quarter, while on an annual basis, values have increased by an average of 5%. Retail warehouse rents were unchanged relative to Q3, but have increased by 1-2% year-on-year.

INVESTMENT FOCUS Retail investment volume totalled approximately €2.4 bn in the fourth quarter. In 2011, nearly €10.9 bn of retail assets were transacted, a 40% increase on the previous year and the highest annual figure since 2007. Prime high street and shopping centre yields were stable over the quarter, while yields for stand-alone retail warehouse units in Frankfurt and Munich moved in by 5-10 bps.

OUTLOOK Whilst economic growth is expected to slow in 2012, the outlook for the retail market is positive. Germany is a popular expansion target, and occupier demand should remain strong. While there are a number of projects in the pipeline (notably Boulevard Berlin, comprising over 60,000 sq.m of retail GLA, scheduled for completion next spring), development activity on the whole remains subdued, and limited availability should support rents going forward.

MARKET OUTLOOK

Prime Rents: Further growth is likely, particularly on the top high streets.

Prime Yields: Moderate compression for prime locations.

Supply: Development subdued; availability will improve in Berlin but remains limited overall.

Demand: Strong, with a number of major players planning expansion.



€ SQ.M/YR

US$ SQ.FT/YR


Berlin 280 3,360 405 9.2 27.3

Frankfurt 290 3,480 420 5.7 7.4

Hamburg 290 3,480 420 n/a n/a

Munich 350 4,200 507 7.0 12.9

Dusseldorf 260 3,120 376 7.0 13.0

Stuttgart 260 3,120 376 4.9 15.6

Cologne 280 3,360 405 7.5 27.3

Leipzig 130 1,560 188 3.8 13.0

Dresden 115 1,380 166 2.8 27.8


€ SQ.M/YR

US$ SQ.FT/YR


Frankfurt 15.20 182 22.0 1.7 1.3

Munich 16.25 195 23.5 1.6 1.6



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Berlin 4.70 4.70 4.70 5.25 4.60

Frankfurt 4.50 4.50 4.50 5.00 4.45

Hamburg 4.40 4.40 n/a n/a n/a

Munich 4.10 4.10 4.10 5.00 3.85

Dusseldorf 4.45 4.45 4.55 5.00 4.45

Stuttgart 4.75 4.75 4.75 5.00 4.60

Cologne 4.45 4.45 4.50 5.00 4.40

Leipzig 5.60 5.60 5.65 6.50 5.25

Dresden 6.00 6.00 6.30 6.50 5.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Frankfurt 6.40 6.40 7.15 7.60 6.25

Munich 6.40 6.40 7.15 7.60 6.25


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Germany 4.80 4.80 5.15 5.75 4.80 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


GERMANY

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW According to provisional data from the Greek statistical service, GDP contracted by 5.0% year-on-year in the third quarter. Retail sales volume (excluding automotive fuel) decreased by 8.8% on an annual basis

in October, following a fall of 5.1% in September. A particularly sharp contraction was recorded in the clothing and footwear segment, with sales declining by 29.8% year-on-year.

OCCUPIER FOCUS Activity continued to slow in Q4, with only a few major international retailers are actively looking for new space and the majority of occupiers focused on renegotiating their leases. Supply exceeds demand; indeed, vacancy is increasing even in the most prestigious retail locations.

Prime high street rents came under further downward pressure over the quarter, declining by 3-4% in most of the locations surveyed. Shopping centre and retail warehouse rents, on the other hand, were unchanged. Modern shopping centre provision in Greece is very low by European standards, and development activity has come to a virtual standstill, with no projects scheduled for completion in 2012 or 2013.

INVESTMENT FOCUS The uncertain economic climate, limited availability of financing and an ever-changing tax environment continue to deter investors, and activity remains subdued. Retail transaction volume totalled €10 mn in the fourth quarter. This brings total retail volume for 2011 to €30 mn, less than a third of the €95 mn transacted in 2010 and the lowest annual figure since 2004. Prime yields moved out across most sub-sectors.

OUTLOOK The economic outlook is highly uncertain, and consumer confidence is likely to suffer as a result of further austerity measures. Christmas trading figures are expected to be particularly poor due to reductions in the ‘13th month’ Christmas bonus. Occupier and investor demand will be subdued for the foreseeable future, although a few major international retailers are still active, taking advantage of challenging trading conditions to increase their presence. High street rents are likely to come under further downward pressure in the coming months. Prime shopping centre and retail warehouse rents will be supported by limited availability and should remain relatively stable, although falls cannot be ruled out.

MARKET OUTLOOK

Prime Rents: Further falls expected on the high streets as supply continues to outstrip demand.

Prime Yields: Expected to come under further upward pressure over the coming months.

Supply: No new projects in the pipeline, but vacancy increasing even in prime locations.

Demand: Retailers extremely cautious, with very few planning to expand.



€ SQ.M/YR

US$ SQ.FT/YR


Athens (Kolonaki-Tsakalof) 110 1,320 159 -9.4 -4.3

Athens (Ermou) 180 2,160 261 -6.4 -7.7

Athens (Glyfada-Metaxa) 115 1,380 166 -8.6 -4.2

Athens (Kifisia-Kolokotroni) 115 1,380 166 -8.6 -4.2

Athens (Piraeus-Sotiros) 65 780 94 -8.3 -7.1

Thessaloniki (Tsimiski) 120 1,440 174 0.0 -7.7



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Athens (Kolonaki-Tsakalof) 7.60 7.40 7.35 7.40 5.50

Athens (Ermou) 7.50 7.50 7.45 7.50 5.00

Athens (Glyfada-Metaxa)* 7.90 7.45 7.40 7.45 5.50

Athens (Kifisia-Kolokotroni)* 7.90 7.45 7.40 7.45 5.50

Athens (Piraeus-Sotiros)* 8.00 7.85 7.80 7.85 6.00

Thessaloniki (Tsimiski) 8.00 7.45 7.40 7.45 5.75


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Greece 7.75 7.60 7.50 8.00 6.00 NOTE: * 6 year record With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%



GREECE

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW GDP increased by 1.4% year-on-year in the third quarter, driven by growth in agricultural production and industrial exports, while household consumption was stagnant. According to the latest figures

from the Central Statistical Office, retail sales volume increased by 0.6% year-on-year in October, 0.3% in September and 0.4% in August, following slight declines in the previous two months. Sales of textiles, clothing and footwear have been contracting since June, falling by 2.6% in October and an uncharacteristically steep 16.8% in September. The books/newspapers and cosmetics segments, on the other hand, have continued to outperform the market.

OCCUPIER FOCUS Retail sales have been stagnant all year, and the majority of occupiers remain cautious. However, some international players have been taking advantage of attractive commercial terms to open stores in Budapest. Prime high street rents came under downward pressure in the fourth quarter, while retail warehouse and shopping centre rents were unchanged. Availability in the capital is expected to increase this year, with four small shopping centres currently under construction, which may put further pressure on rents in the coming months.

INVESTMENT FOCUS Scarce availability of debt and investment-grade product remains a barrier for investors, and no retail transactions were recorded in the fourth quarter. Retail volume for the year as a whole, at €119 mn, was 30% below 2009 and 2010 levels. Much of the 2011 total is accounted for by the purchase of Árkád shopping centre in Budapest by ECE for €49mn and the purchase of Szeged Retail Park by Erste Fund for €35mn, both concluded in Q1.

OUTLOOK Economic growth is expected to slow considerably in 2012 and a rebound in consumer spending is unlikely in the foreseeable future. In November, the government introduced legislation banning the construction of commercial buildings larger than 300 sq.m, effective from 1 January 2012 to 31 December 2014, although exemptions can be granted by the Economy Minister. As a consequence of this “plaza stop” legislation, no new supply is expected to come onto the market in 2013/4, and vacant space in existing schemes should gradually be absorbed as selected retailers continue to expand.

MARKET OUTLOOK

Prime Rents: Generally sable, although further falls cannot be ruled out.

Prime Yields: Expected to hold firm.

Supply: Development activity has come to a standstill.

Demand: Will remain highly selective, with interest focused on the top retail locations.



€ SQ.M/YR

US$ SQ.FT/YR


Budapest (Váci utca) 90 1,080 130 -5.6 -10.0

Budapest (Andrássy út) 40 480 58 -7.8 -20.0


€ SQ.M/YR

US$ SQ.FT/YR


Budapest 8.00 96 11.6 -2.3 0.0

Budaörs 8.00 96 11.6 -2.3 -5.9



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Budapest (Váci utca) 6.50 6.75 7.00 10.50 5.50

Budapest (Andrássy út) 6.50 7.00 7.25 11.50 6.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Budapest 7.75 7.75 8.00 10.75 6.25

Budaörs 7.75 7.75 8.00 10.75 6.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Hungary 6.50 6.50 7.00 9.75 5.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-20.0%

-10.0%

0.0%

10.0%

20.0%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%



HUNGARY

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011




OVERVIEW According to provisional figures from the Central Statistical Office, GDP declined by 0.1% year-on-year in the third quarter, with personal consumption contracting by 3.9%. Consumer confidence remains low; the

KBC/ESRI index fell sharply in December after making some gains in the previous months. Retail sales volume (excluding motor trades) declined by 0.8% year-on-year in November, 3.4% in October, and 3.3% in September.

OCCUPIER FOCUS Trading conditions remain highly challenging and the recent VAT increase is unlikely to bolster retailers’ confidence. However, the occupier market has proven resilient. Indeed, an upturn in lettings activity was observed in Dublin in 2011 after a long period of stagnation, with international retailers taking advantage of lower rents and favourable lease terms to gain a foothold in Ireland. Discounters continue to account for a major portion of market activity, expanding aggressively across the country. The pharmacy market is also becoming increasingly competitive, with several major players looking to expand their presence.

Despite relatively strong activity, prime high street rents came under downward pressure over the quarter. Values in Dublin edged down by 6%, whereas Galway and Limerick saw falls of 9% and 20% respectively. In Cork and Waterford, the declines were more moderate as values edged down by 2% and 3%, respectively. Prime shopping centre and retail warehouse rents were unchanged.

INVESTMENT FOCUS The government recently scrapped plans to ban upward-only rent reviews for commercial leases signed before 28 February 2010 (upward-only rent review clauses have already been abolished for all new leases signed on or after this date) – which should allay some concerns about future income streams. Due to uncertainty surrounding the ban, investment activity ground to a virtual halt in 2011. Retail volume totalled only €35 mn for the entire year, an 81% decline on 2010. Prime yields in most of the locations surveyed moved out by 10-15 bps over the quarter.

OUTLOOK Trading conditions are expected to remain challenging for the foreseeable future. However, it appears that many retailers are taking a long-term view of the Irish market, and the increased activity seen in recent months gives rise to cautious optimism about the outlook for 2012. Nevertheless, rents are likely to come under further downward pressure as landlords become increasingly pragmatic and flexible.

MARKET OUTLOOK

Prime Rents: Further falls expected. Landlords increasingly flexible.

Prime Yields: Moderate upward pressure likely.

Supply: Decreasing for prime locations. Development subdued, with almost all projects on hold.

Demand: Overall demand should remain stable, with interest focused on the best locations.


HIGH STREET SHOPS Zone A € SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Dublin (Grafton Street) 5,000 2,536 306 -12.0 -10.7

Dublin (Henry Street) 3,750 1,902 229 -9.0 -6.3

Cork 2,400 1,217 147 -9.7 -15.8

Limerick 600 304 37 -25.4 -33.3

Waterford 800 406 49 -16.7 -8.6

Galway 1,500 761 92 -12.9 -14.3


US$ SQ.FT/YR


Dublin 150 18.1 -14.1 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Dublin (Grafton Street) 6.85 6.75 6.25 6.85 2.85

Dublin (Henry Street) 6.85 6.75 6.25 6.85 2.75

Cork 7.85 7.75 7.50 7.85 3.70

Limerick 8.15 8.00 7.75 8.15 4.00

Waterford 8.25 8.25 7.75 8.25 4.00

Galway 8.00 8.00 7.50 8.00 3.75


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Dublin 8.00 7.90 7.75 8.00 4.25


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Ireland 8.00 7.85 7.50 8.00 4.25 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


IRELAND

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW Economic activity in the country saw its first quarter-on-quarter contraction since 2009 as GDP edged down 0.2% in Q3. Although net export recorded a surplus, consumer spending eased back 0.3%. In the

same vein, retail sales (current prices) remained depressed as annual growth in October was a negative 1.5%, the sixth consecutive monthly fall. The latest figures were not entirely uniform, with annual food growth reaching 0.9% and non-food sales lagging behind as they declined by 2.5%. Large retail chains also outperformed smaller operators, with the difference particularly pronounced in the food segment.

OCCUPIER FOCUS Occupier demand for high street units remains focused on prime products as the uncertain economic climate and lower turnover introduce prudence to the market. Some of the retailers which are recording good results still have expansion plans, but most are cautious regarding new openings. Prime retail parks and shopping centres have been able to absorb the impact of the decrease in demand. Rental values for prime pitch units have held steady in the fourth quarter, while development activity remains subdued due to limited debt financing. Financial market volatility and concerns surrounding the country’s sovereign debt have to some extent cooled developers’ plans, with projects being delayed or placed on hold.

INVESTMENT FOCUS While investment activity slowed in the fourth quarter as almost €500 mn worth of retail assets were traded, 2011 was a very positive year for the sector, with total investment volumes of approximately €2.1 bn. Notable shopping centre transactions completed in Q4 included the sale by SEB of Megalò in Chieti and of the recently opened Punta di Ferro centre in Forli, developed by Coopsette. Elsewhere, Castello Sgr acquired a portfolio of 10 Coop supermarkets in a sale and leaseback deal at just under €50 mn.

OUTLOOK The financial measures introduced by the new Government are expected to have an adverse impact on sales for most retailers. In Milan a new congestion charge has been introduced for private vehicles entering the central zone, which many retailers see as a negative development. Luxury retailers are also concerned about the new limit on the acceptability of cash payment (up to €1,000), particularly for foreign visitors.

MARKET OUTLOOK

Prime Rents: Notwithstanding a challenging background, prime values are expected to hold up.

Prime Yields: Mostly stable, but softening likely in some sub-sectors.

Supply: Development activity slowed by economic uncertainty and lack of financing.

Demand: Retailers will remain cautious.



US$ SQ.FT/YR


Milan 7,000 844 3.8 2.9

Rome 6,800 820 5.3 1.5

Bologna 2,200 265 n/a 4.8

Naples 1,900 229 0.0 0.0

Turin 1,700 205 2.5 0.0


US$ SQ.FT/YR


Milan 220 26.5 -3.3 0.0

Rome 200 24.1 -5.1 0.0

SHOPPING CENTRES € SQ.M/YR

US$ SQ.FT/YR


Milan 800 96.5 0.5% 6.7%

Rome 800 96.5 3.3% 6.7%



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Milan 5.00 5.00 5.00 5.00 4.00

Rome 5.00 5.00 5.00 5.00 4.25

Bologna 5.75 5.50 5.50 6.50 5.00

Naples 6.00 6.00 6.00 7.00 5.25

Turin 5.50 5.50 5.50 6.75 5.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Milan 7.00 7.00 7.00 7.00 6.00

Rome 7.00 7.00 7.00 7.00 6.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Milan 6.25 6.25 6.25 6.50 5.00

Rome 6.25 6.25 6.25 6.50 5.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


ITALY

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW Trading conditions remain particularly challenging, with the volume of retail sales in November falling for the seventh consecutive month. According to provisional data from the Central Bureau of

Statistics (CBS), annual sales declined by 1.6% in November, which was preceded by sharper contractions in September (3.8%) and October (4.4%). The latest fall stemmed yet again from the weakness in the non-food segment, with sales in home furnishing, DIY and consumer electronics shops markedly down. Conversely, sales in food shops fared better as growth stagnated in November, with supermarkets even managing a growth of 0.4%.

OCCUPIER FOCUS Occupier activity in 2011 was centred in the four major cities (Amsterdam, Rotterdam, The Hague and Utrecht), with international retailers driving demand. Amsterdam remains the most sought-after city, followed by Rotterdam where an increasing number of retailers established their first Dutch store, often favouring the city over the capital. Supply in prime locations remains scarce, with high streets in the four major cities witnessing almost zero vacancy as demand outstrips supply, particularly in Amsterdam and Rotterdam. On the other hand, smaller cities, towns and retail warehouse locations are seeing availability rise on the back of lower demand and increased competition from online retailers.

INVESTMENT FOCUS Compared to 2010 the total volume of retail products traded fell significantly. Indeed, while retail assets were the main investment class in 2010, they faded to second in 2011, surpassed by offices. Activity in the fourth quarter improved slightly, with approximately €394 mn worth of retail assets traded, however, the total for the year (€1.2 bn) was €1 bn short of the figure recorded in 2011. Excluding small shopping centres without supermarkets, where values softened by 20 bps, prime yields over the quarter were unchanged in all sub-sectors.

OUTLOOK Occupier demand in 2012 will remain focused on the major cities, while declining retail spending and increased competition from internet operators are expected to adversely affect secondary locations, where supply will increase further. Investment activity is also expected to slow, with investors primarily interested in prime products with a dominant catchment and strong tenant mix.

MARKET OUTLOOK

Prime Rents: Amsterdam and Rotterdam may experience further upward pressure.


Supply: Prime stable; increasing in secondary cities, smaller towns and retail warehouse locations.

Demand: Strong demand for prime high streets and dominant locations; weak elsewhere.



US$ SQ.FT/YR


Amsterdam 2,700 326 8.4 12.5

Rotterdam 1,800 217 5.2 0.0

Den Haag 1,500 181 7.4 3.4

Utrecht 1,600 193 5.9 3.2

Maastricht 1,600 193 4.2 0.0

Eindhoven 1,450 175 5.7 3.6


US$ SQ.FT/YR


Amsterdam 135 16.3 -1.4 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Amsterdam 4.70 4.70 4.70 5.60 4.00

Rotterdam 5.00 5.00 5.00 5.80 4.75

Den Haag 5.10 5.10 5.10 6.00 4.75

Utrecht 5.10 5.10 5.10 6.00 4.75

Maastricht 5.10 5.10 5.10 6.00 4.75

Eindhoven 5.10 5.10 5.10 6.30 4.75


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Amsterdam 7.60 7.60 7.60 7.75 6.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

4.00%

5.00%

6.00%

7.00%

8.00%



THE NETHERLANDS

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW According to preliminary figures from Statistics Norway, GDP grew 3.8% year-on-year in the third quarter; Mainland GDP (excluding oil and gas extraction and incidental activities) increased by 2.9%, with

household consumption rising 2.5%. Retail sales volume (excluding motor vehicles, motorcycles and automotive fuel) grew 0.9% year-on-year in November, 1.2% in October and 3.0% in September.

OCCUPIER FOCUS Demand for prime retail space has continued to improve, with full occupancy reported on the top high streets. High occupancy levels have also been reported in large, well-located shopping centres. Prime high street and shopping centre rents were unchanged over the quarter. On Karl Johan Gate, rents have returned to 2007-08 levels; elsewhere values are still below pre-crisis levels but stable and supported by healthy demand. Retail park values increased by nearly 5% over the quarter.

Per capita shopping centre provision in Norway is the highest in Europe, and in the past few years development activity has started to shift towards the extension and refurbishment of existing schemes. Recent completions include the first phase of the Sørlandssenteret extension in Kristiansand, which added 21,045 sq.m of new space. The scheme will be extended further in 2012 and 2013, and upon completion will be the largest shopping centre in the country. Major extensions of Strømmen Storsenter, Vestkanten and Jekta Storsenter are also in the pipeline.

INVESTMENT FOCUS Retail transaction volume in the fourth quarter totalled €256 mn, double the €127 mn recorded in Q4 2010. Retail volume for the year as a whole, at €822 mn, was 26% down on 2010, but still considerably higher than the €265 mn recorded in 2009. Recent transactions include Salto Eiendom’s purchase of Rortunet Senter in Slemmestad for €33 mn and Sjøsiden Senter in Mosjøen for €21 mn. Yields were stable over the quarter across all sub-sectors.

OUTLOOK The economy is expected to expand further in 2012, although growth is likely to be modest and driven largely by domestic demand. The outlook for the retail market is positive, with Statistics Norway predicting strong growth in household consumption in 2012; occupier demand is expected to remain strong. Overall, rents should remain stable, although moderate growth is possible in the most-sought after locations.

MARKET OUTLOOK

Prime Rents: Largely stable, although moderate growth is possible on the top high streets.

Prime Yields: Expected to remain unchanged.

Supply: Several projects in the pipeline; availability should improve in 2012/13.

Demand: Occupier demand is still improving, particularly for prime high street units.


HIGH STREET SHOPS Nkr SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Oslo (Karl Johan Gate) 16,000 2,065 249 1.3 6.7

Oslo (Bogstadveien Street) 11,000 1,420 171 -3.3 10.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Oslo (Karl Johan Gate) 5.25 5.25 5.75 8.00 4.50

Oslo (Bogstadveien Street) 5.50 5.50 6.00 8.00 4.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Norway 5.50 5.50 6.00 8.00 5.25 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

4.00%

5.00%

6.00%

7.00%

8.00%



NORWAY

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW According to provisional figures from the Central Statistical Office, GDP (seasonally adjusted, at constant prices) grew 4.2% year-on-year in the third quarter. Retail sales continued to rise: volume increased

by 7.4% year-on-year in November, 6.8% in October and 7.7% in September. With the exception of food, beverages and tobacco, which saw sales decline slightly in October and November, strong annual growth was recorded across most market segments. Clothing, footwear, cosmetics and pharmaceuticals have performed particularly well, recording double-digit growth compared to 2010.

OCCUPIER FOCUS Occupier demand remains highly selective, with interest focused on prime pitches in the largest cities. Many international retailers are in expansion mode, taking advantage of incentives and relatively low rents to increase their presence. Smaller players, on the other hand, are far more cautious. Prime high street and retail warehouse rents were stable over the fourth quarter, while shopping centre values recorded a mixed performance, rising by up to 3% in Warsaw, Kraków and Silesia, decreasing by 3% and 5% respectively in Poznan and Szczecin, and remaining stable in Lodz, Wroclaw, and the Tricity area.

Major completions in recent months include Millenium Hall in Rzeszów (52,000 sq.m), Plaza Torun in Torun (39,000 sq.m), Galeria Ostrovia in Ostrów Wielkopolski (36,000 sq.m), and Futura Park in Krakow, which comprises a 22,000 sq.m factory outlet centre and 20,000 sq.m of retail warehouse space.

INVESTMENT FOCUS Retail investment volume totalled €354 mn in Q4, a 33% decline on the previous quarter and a 25% fall relative to Q4 2010. Nevertheless, retail volume in 2011, at nearly €1.2 bn, exceeds the previous year’s figure by 18%, as well as being the highest annual total since 2007. Prime yields were unchanged over the quarter across all sub-sectors.

OUTLOOK Despite forecasts of slowdown, the Polish economy should continue to outperform much of Europe in 2012. Poland is an attractive expansion target and demand for new space will remain healthy, albeit increasingly selective. Shopping centre completions are expected to slow in the year ahead and prime rents will be supported by limited availability, possibly coming under upward pressure in the most sought-after locations. The gap between prime and secondary locations will widen, with the latter attracting little interest.

MARKET OUTLOOK

Prime Rents: Generally stable, with moderate growth possible in the most sought-after locations.


Supply: Completions will slow in 2012. No new projects in the capital.

Demand: Fair demand from large international players, weak from smaller tenants.



€ SQ.M/YR

US$ SQ.FT/YR


Warsaw 85.0 1,020 123.0 4.0 2.4

Krakow 79.0 948 114.3 5.7 2.6

Katowice 59.0 708 85.4 5.6 0.0

Poznan 58.0 696 83.9 6.2 0.0

Lodz 28.0 336 40.5 -1.4 -6.7

Wroclaw 46.0 552 66.6 1.4 -6.1



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Warsaw 7.75 7.75 8.50 12.50 7.25

Krakow 8.00 8.00 8.75 14.00 7.75

Katowice 8.00 8.00 9.25 14.00 8.00

Poznan 8.00 8.00 9.25 13.00 8.00

Lodz 8.00 8.00 9.25 14.00 8.00

Wroclaw 8.00 8.00 9.25 14.00 8.00

STAND ALONE RETAIL WAREHOUSING UNITS (FIGURES ARE GROSS)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Poland 8.00 8.00 8.00 13.00 6.25


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Poland 6.00 6.00 6.50 10.00 5.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%



POLAND

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW According to Statistics Portugal, GDP contracted by 1.7% year-on-year in the third quarter. Retail sales have been in continuous decline since the beginning of 2011, with volume (calendar and seasonally

adjusted; excluding automotive fuel) decreasing 8.8% year-on-year in November, 9.2% in October and 6.3% in September. Consumer confidence has been on a downward trajectory all year, reaching a historic low in November. Business sentiment has also continued to deteriorate; in December, the retailer confidence indicator fell to its lowest level since early 2009.

OCCUPIER FOCUS Retailers already established in Portugal have been extremely cautious in recent months, focusing on new price strategies and customer loyalty initiatives rather than implementing expansion plans. However, there have been no mass shop closures or withdrawals from the market. Indeed, several international brands are considering market entry, taking advantage of challenging conditions to negotiate favourable terms and establish a presence on the country’s top high streets.

Prime rents were unchanged over the quarter across all sub-sectors, supported by limited availability. While there are a number of projects at the early development stage, these are subject to delay or cancelation. However, the few schemes which are under construction should continue to attract interest, provided they have an appealing potential catchment area.

INVESTMENT FOCUS Amid concerns about diminishing consumer spending, most institutional investors remain wary of large-scale acquisitions. Retail investment volume totalled €72 mn in 2011, the lowest annual figure in almost a decade. While the high street sub-sector is still attracting considerable interest, activity is constrained by limited supply. Shopping centre and retail warehouse yields moved out by 25-50 bps over the quarter, while high street values held firm.

OUTLOOK Despite weak consumer sentiment, demand for space in prime locations remains relatively healthy, with several new entries planned for 2012. Limited availability should support rents in the year ahead. The top high streets in Lisbon are likely to be particularly resilient, attracting considerable interest from occupiers and investors alike. Secondary locations, on the other hand, are experiencing falling demand, with rents coming under continued downward pressure.

MARKET OUTLOOK

Prime Rents: Stable for the most sought-after locations, supported by limited availability.

Prime Yields: May soften further due to weak demand and challenging economic conditions.

Supply: Completions expected to remain low for the foreseeable future.

Demand: Stable for the most sought-after locations. Retailers becoming increasingly selective.



€ SQ.M/YR

US$ SQ.FT/YR


Lisbon (Chiado) 80 960 116 1.3 0.0

Lisbon (Avenida Liberdade) 73 870 105 -0.7 0.0


€ SQ.M/YR

US$ SQ.FT/YR


Portugal 9.00 108 13.0 -5.6 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Lisbon (Chiado)* 7.00 7.00 6.25 7.00 6.00

Lisbon (Avenida Liberdade) 7.25 7.25 6.75 7.25 6.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Portugal 10.00 9.50 8.00 10.00 5.75


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Portugal 7.75 7.50 6.50 7.75 5.00 NOTE: * 9 year record With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

4.00%

5.00%

6.00%

7.00%

8.00%



PORTUGAL

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW The Romanian economy maintained its positive momentum in Q3 as GDP expanded by a seasonally adjusted 1.8% on the previous quarter and 4.4% (unadjusted) year-on-year. Driven in part by growth in

consumer spending, the latest results add to the already recovering economy, which looks set to rebound in 2011 from the contraction witnessed in 2009-2010. Increased spending appears to have also carried over to the fourth quarter, with retail sales (excluding motor vehicles and motor cycles) in October and November, rising by 2.0% and 1.9% respectively. Growth in the latter month was fuelled by strong non-food sales (7.2%) and automotive fuel sold in specialised shops (4.6%), while conversely the sale of food, beverages and tobacco declined by 4.9%.

OCCUPIER FOCUS Healthy retailers are again looking at their portfolio and evaluating expansion opportunities. At the same time, struggling operators have shown signs of recovery. Occupier activity is currently also being supported by international fashion and grocery retailers eager to take advantage of relatively low rents.

There were five new retail schemes opening their doors to the public in the fourth quarter – four shopping centres and a retail park – while another shopping centre in Bucharest was extended in order to accommodate new leisure elements. The schemes added a further 156,830 sq.m of GLA to the provision of modern space in the country. Meanwhile, the opening of Palas Iasi (47,500 sq.m) shopping centre was postponed to Q2 2012 from Q4 2011.

INVESTMENT FOCUS Investment market activity improved on the already positive third quarter, with approximately €22 mn worth of retail assets being traded in Q4. The most important transaction was the acquisition of City Mall shopping centre in Bucharest by the Greek investors Star Imob for just over €17 mn. Prime yields remained stable, with the only exception prime shopping centre yields in Brasov, which softened by 25 bps.

OUTLOOK Improved economic conditions, attractive pricing and a looser monetary policy are expected to aid the sector this year. Indeed, prime rental values in some of the top high street and shopping centre locations may even come under some upward pressure in 2012. While yields are anticipated to remain largely unchanged, retail warehouses in Bucharest may see some softening.

MARKET OUTLOOK

Prime Rents: Stable but with potential rises in some premier high streets and shopping centres.

Prime Yields: Yields to remain unchanged, with possible softening for retail warehouses in the capital.

Supply: Several major schemes are expected to boost supply in the coming months.

Demand: Supported by lower costs and improved trading conditions, demand will be active.



€ SQ.M/YR

US$ SQ.FT/YR


Bucharest (Magheru Boulevard) 65.0 780 94.1 -10.0 0.0

Bucharest (Calea Victoriei) 55.0 660 79.6 -11.3 0.0

Brasov 37.0 444 53.5 -1.5 23.3

Timisoara 35.0 420 50.7 -2.6 0.0

Constanta 27.0 324 39.1 -7.6 0.0

Cluj Napoca* 35.0 420 50.7 -10.2 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Bucharest (Magheru Boulevard) 9.25 9.25 9.25 16.00 7.50

Bucharest (Calea Victoriei) 9.25 9.25 9.25 16.00 7.50

Brasov 10.00 10.00 10.00 15.00 8.00

Timisoara 10.00 10.00 10.00 15.00 8.00

Constanta 10.00 10.00 10.00 15.00 8.00

Cluj Napoca* 10.00 10.00 10.00 12.00 8.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Romania 9.00 9.00 9.00 9.00 6.25 NOTE: * 6 year record With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-35.0%

-17.5%

0.0%

17.5%

35.0%

4.00%

5.50%

7.00%

8.50%

10.00%

11.50%



ROMANIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW According to Rosstat, GDP grew 4.8% year-on-year in the third quarter. Inflation continues to outstrip growth, but has slowed considerably in recent months. Retail sales volume increased by 8.6% year-

on-year in November, 9.0% in October, and 9.4% in September.

OCCUPIER FOCUS Several major retailers have announced expansion plans in recent months, and interest in the regions continues to grow. Due to restrictions on construction, development activity in Moscow has slowed considerably. Vacancy in the capital’s best shopping centres came under downward pressure and is now close to zero. Prime retail rents were stable across for the second consecutive quarter. However, on an annual basis, rents in the most sought-after high street and shopping centre locations have gone up by 10-15%.

The focus of development in Moscow has shifted towards small format projects; there has also been an increase in activity beyond the Third Transport Ring. Indeed, the fourth quarter saw two major completions on Moscow’s outskirts: Torgovy Kvartal in Domodedovo and Park Plaza in Elektrostal. Elsewhere in the country, the development pipeline for large-scale projects remains strong, with major schemes under construction in the Povolzhie and Central economic regions, Krasnodar, Rostov-on-Don, and Sochi.

INVESTMENT FOCUS Investment activity slowed in the fourth quarter, with €122 mn of retail assets transacted – compared to €160 mn in the previous quarter. Nevertheless, this brings the 2011 total to €1.4 bn, the highest annual figure since 2007. Retail accounted for nearly 27% of investment activity in 2011, a considerable improvement on the previous year’s share of 6%. Prime shopping centre and high street yields moved in over the quarter, by 25 bps and 50 bps respectively, while retail warehouse values were unchanged.

OUTLOOK The outlook for the retail market is positive as many occupiers continue to expand. However, political tensions in the run-up to the election and economic uncertainty in Europe are likely to affect investors’ confidence in the coming months, and transactional activity is expected to slow to 2007-08 levels. With shopping centre vacancy in Moscow finishing the year at around 1%, rents in the capital are likely to come under further upward pressure.

MARKET OUTLOOK

Prime Rents: Stable overall, with some growth in top locations, particularly Moscow.

Prime Yields: May come under slight upward pressure as investor confidence wanes.

Supply: Rising in the regions and on the outskirts of Moscow; shortage in central Moscow.

Demand: Strong, with many retailers expanding, and growing interest in the regions.


HIGH STREET SHOPS US$ SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Moscow (Tverskaya) 4,500 3,466 418 10.0 12.5

Moscow (Novy Arbat) 2,500 1,926 232 2.6 0.0

St Petersburg 2,500 1,926 232 35.4 25.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Moscow 9.25 9.50 10.00 13.00 8.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-35.0%

-17.5%

0.0%

17.5%

35.0%

4.00%

7.00%

10.00%

13.00%

16.00%



RUSSIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW GDP increased by 0.5% year-on-year in the third quarter. Market conditions remain challenging, with high unemployment and inflation impacting on consumer spending (although inflation has slowed after peaking

in April). Retail sales have been on a downward trajectory since January. According to the latest figures from the Statistical Office of the Republic of Serbia, sales volume declined by 16.4% year-on-year in November, 16.2% in October and 18.3% in September.

OCCUPIER FOCUS In light of this year’s disappointing retail sales figures, most occupiers remain cautious. However, several new entries were reported in recent months, with retailers taking advantage of challenging conditions to secure favourable lease terms. The market has significant long-term potential, particularly if Serbia achieves EU accession; a decision on candidate status is expected in March.

Prime rents are supported by limited supply and held firm in the third quarter. Availability of high-quality retail space in the capital is restricted to the main shopping area around Kneza Mihaila and handful of malls, most of them built in the past five year. Per capita shopping centre provision is very low by European standards, although provision across Serbia should increase in the next few years. Scheduled completions for 2012/13 include Kragujevac Plaza shopping centre in Kragujevac, BIG CEE retail park in Novi Sad and Visnjicka Plaza shopping centre in Belgrade.

INVESTMENT FOCUS Investment activity remains subdued due to strict lending criteria and a continued shortage of quality stock. No major retail transactions were recorded over the quarter, and yields were unchanged across all sub-sectors. However, if EU candidate status is granted, Serbia’s credit rating is likely to improve, and investment activity may pick up.

OUTLOOK Economic conditions will remain challenging in the short term, and a recovery consumer sentiment is unlikely in 2012. With several schemes in the pipeline, landlords are expected to become increasingly flexible and rents may come under some downward pressure. However, the retail market is underdeveloped relative to other European countries, with significant opportunities for retailers, developers and investors, particularly if Serbia achieves EU accession.

MARKET OUTLOOK

Prime Rents: May come under downward pressure, particularly if sales continue to fall.

Prime Yields: Expected to hold firm in the short term, although softening is possible.

Supply: Several schemes in the pipeline; growth of factory outlet and retail warehouse formats.

Demand: Most retailers highly cautious, although some interest from international players.



US$ SQ.FT/YR


Belgrade (Kneza Mihaila) 1,100 133 -3.6 -8.3



CURRENT QUARTER

LAST QUARTER

LAST YEAR

6 YEAR HIGH LOW

Belgrade (Kneza Mihaila) 10.50 10.50 10.50 11.00 9.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4.00%

6.00%

8.00%

10.00%

12.00%



SERBIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW The strong momentum of the Slovakian economy was maintained in the third quarter as GDP grew 3.0% year-on-year. However, activity in 2011 has been largely driven by strong exports and industrial

production, while consumer spending has remained stagnant. Indeed, household consumption declined by 0.9% year-on-year in the third quarter. Such an environment continues to affect retail trading, with sales volume (excluding motor vehicles) declining by 3.0% year-on-year in November, 3.1% in October, and 3.6% in September.

OCCUPIER FOCUS The prevailing trend in the occupier market is one of stability. Tenants are currently only looking for the best conditions and locations, and leasing activity remains heavily focused on prime pitches. Prime rents were unchanged over the quarter across all sub-sectors. Secondary locations, on the other hand, are experiencing falling demand, with rents coming under downward pressure.

Availability in the capital will increase in 2012 following the opening of Centrál shopping centre (33,000 sq.m GLA), scheduled for completion in the autumn. There are several other shopping centre and retail warehouse schemes at the planning stage across the country, and cities including Prešov, Trnava and Zvolen could potentially see supply boosted in the next few years.

INVESTMENT FOCUS Unibail Rodamco purchased HB Reavis Group’s 50% stake in Aupark Bratislava for €151 million in November, becoming the sole owner of the shopping centre. This brings total retail volume for 2011 to €191 million, the highest annual figure since 2007. Prime yields were stable over the quarter across all sub-sectors.

OUTLOOK The Central Bank of Slovakia has recently revised its growth forecast for 2012 downwards, as weaker external demand is expected to impact on exports and employment. With consumer confidence declining considerably in recent months and finishing the year at its lowest level since April 2009, a revival in the retail market looks unlikely in the short term. Retailers are becoming increasingly selective, and the gap between prime and secondary properties is expected to widen further. The impact of Centrál shopping centre on rents in Bratislava remains to be seen; however, high-quality shopping centres continue to attract considerable interest, and it is hoped that the new space will be absorbed.

MARKET OUTLOOK

Prime Rents: Largely stable across the board, although some declines cannot be ruled out.

Prime Yields: Unlikely to move in the short term.

Supply: Expected to benefit from the addition of shopping centre space in 2012/2013.

Demand: Demand is expected to remain largely stable and will be focused on top locations.



US$ SQ.FT/YR


Bratislava 504 61 -9.2 -6.7



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Bratislava 7.25 7.25 7.25 17.75 6.00 SHOPPING CENTRES (FIGURES ARE GROSS)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Slovakia 7.25 7.25 7.25 7.75 6.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-35.0%

-17.5%

0.0%

17.5%

35.0%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%



SLOVAKIA

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW GDP grew 0.8% year-on-year in the third quarter. Retail sales, however, continued to decline, with unemployment and limited growth in real disposable incomes acting as a drag on spending. Sales volume (excluding

service stations, adjusted for calendar effects) decreased by 7.1% year-on-year in November, 7.0% in October and 5.4% in September.

OCCUPIER FOCUS Despite challenging trading conditions, there is still strong demand for prime shopping centres and retail parks, as well as the best high street pitches in the largest cities. Prime rents are supported by limited availability and remained stable over the quarter in most of the locations surveyed. Indeed, moderate increases were recorded on selected high streets in Barcelona.

On the whole, there is limited interest for recently opened schemes, and development activity is expected to remain subdued for the foreseeable future. Only two new shopping centres opened in the second half: Muelle I in Málaga (13,000 sq.m GLA) and Centro Comercial Icod in Icod de los Vinos (9,000 sq.m). Several retail parks were also completed, by far the largest being La Abadía in Toledo (50,000 sq.m). Approximately 500,000 sq.m of shopping centre and retail warehouse space is in the pipeline for 2012/13, with large schemes under construction in Zaragoza, Arroyo de la Encomienda, Orihuela, Majadahonda, Santiago de Compostela and Badajoz. However, many projects are on hold and delays are possible.

INVESTMENT FOCUS Retail investment volume totalled €337 mn in the fourth quarter. This includes the largest transaction of the year, Unibail-Rodamco’s purchase of Splau shopping centre in Barcelona for €186 mn. In 2011 as a whole, €733 mn of retail assets were transacted, less than half the €1.9 bn recorded in the previous year. While prime assets are attracting considerable interest, activity is constrained by limited availability of debt financing and a shortage of stock.

OUTLOOK A recovery in retail sales looks improbable in the short term, with further austerity measures expected to impact on consumer spending. However, dominant locations will continue to attract a healthy level of demand from occupiers and investors alike, and prime rents should remain stable, supported by limited availability. Secondary rents, on the other hand, are likely to come under further downward pressure as demand for new space becomes increasingly selective.

MARKET OUTLOOK

Prime Rents: Prime rents are well-supported and expected to remain stable in the short term.

Prime Yields: Should hold firm.

Supply: Availability remains low for prime properties and high for secondary.

Demand: Strong for prime locations; two-tier market becoming more deeply entrenched.



€ SQ.M/YR

US$ SQ.FT/YR


Madrid 240 2,880 347 0.9 0.0

Barcelona 265 3,180 384 8.0 1.9

Seville 120 1,440 174 0.9 0.0

Bilbao 120 1,440 174 1.8 0.0

Valencia 130 1,560 188 1.6 0.0

Malaga 145 1,740 210 3.9 0.0

Palma 85 1,020 123 5.5 0.0

Zaragoza 105 1,260 152 3.1 0.0


€ SQ.M/YR

US$ SQ.FT/YR


Madrid 17.50 210 25.3 3.1 0.0

Barcelona 17.00 204 24.6 3.2 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Madrid 4.85 4.75 4.75 5.75 4.00

Barcelona 4.85 4.75 4.75 5.75 4.00

Seville 5.50 5.25 5.50 6.00 4.50

Bilbao 5.50 5.25 5.50 6.25 4.50

Valencia 5.50 5.25 5.50 6.00 4.50

Malaga 5.50 5.00 5.50 6.50 4.50

Palma 5.50 5.50 5.75 6.50 4.50

Zaragoza 5.50 5.50 5.75 6.50 4.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Madrid 6.50 6.50 6.50 7.50 4.70

Barcelona 6.50 6.50 6.50 7.50 4.70


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Spain 6.00 6.00 6.00 6.25 4.25 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


SPAIN

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW The Swedish economy continues to outperform other western European markets, with GDP in Q3 expanding by 1.6% over the previous quarter and 4.6% year-on-year. However, favourable

economic conditions have not translated into similarly buoyant results in the retail sector. While sales in November grew by 0.7% on the same period in 2010, it followed two months of falls and the sector is on track to record the lowest annual sales growth figure in over a decade.

OCCUPIER FOCUS Higher turnovers achieved in recent years have allowed developers to expand their portfolios, with the capital in particular benefiting from the opening of several new shopping centres. The provision of modern space in Sweden is expected to continue improving with the addition of a number of large schemes, which are scheduled to open by the end of 2015.

Occupier demand has been less dynamic than anticipated at the start of the year. However, interest remains active, supported by international brands eager to establish their first store in the country. This interest is, nonetheless, curtailed by the limited availability of prime space, with supply restricted to a number of small streets and locations. The demand/supply imbalance has consequently affected rents, with prime values for high streets and shopping centres edging up over the quarter.

INVESTMENT FOCUS Activity in the investment market was particularly brisk as €761 mn worth of retail assets were traded in Q4. This was the highest quarterly figure in over three years, bringing the total for 2011 to approximately €1.9 bn. Trading volumes were, however, dominated by one portfolio deal, the sale of three shopping centre in Stockholm (Fältöversten, Ringen and Västermalmsgallerian) for €440 mn. The schemes were acquired by AMF Fastigheter, the investment arm of a large Swedish pension fund, from Centeni (Royal Bank of Scotland). Prime shopping centre yields hardened by 25 bps, but elsewhere values were stable.

OUTLOOK The economy is expected to slow in 2012 on the back of weaker external demand and lower consumer spending growth; however, the first base interest rate cut since 2009 may be the first step towards a potentially looser monetary policy, which should help alleviate concerns in the retail market.

MARKET OUTLOOK

Prime Rents: Prime values expected to remain stable.

Prime Yields: Yields unlikely to change in the short-term.

Supply: Provision of shopping centre space to improve in the long run.

Demand: Stable demand, with interest focused on prime pitches.


HIGH STREET SHOPS Skr SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Stockholm 14,600 1,641 198 4.0 4.3

Gothenburg 8,050 905 109 2.0 3.2

Malmo 6,200 697 84 1.3 3.3

RETAIL PARKS Skr SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Stockholm (Kungens Kurva) 1,850 208 25.1 0.5 5.7

Stockholm (Barkarby) 1,850 208 25.1 0.5 5.7



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Stockholm 5.00 5.00 5.00 6.00 4.50

Gothenburg 5.50 5.50 5.75 6.50 5.25

Malmo 5.50 5.50 5.75 7.00 5.50


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Stockholm (Kungens Kurva) 5.75 5.75 6.00 7.25 5.00

Stockholm (Barkarby) 5.75 5.75 6.00 7.75 5.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Sweden 5.00 5.25 5.25 6.50 4.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-10.0%

-5.0%

0.0%

5.0%

10.0%

4.00%

5.00%

6.00%

7.00%

8.00%



SWEDEN

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW Economic growth in Q3 suffered another slowdown, with consumer spending stagnant and trading conditions in the retail sector mirroring the more subdued economic environment. However, while

retail sales over the third quarter were largely lacklustre, preliminary data from the State Secretariat for Economic Affairs (SECO) suggest a slight improvement in Q4. Retail sales volumes (excluding fuel) in November climbed 1.8% on the same period in 2010, driven mainly by stronger non-food sales (2.2%).

OCCUPIER FOCUS Notwithstanding the downcast economic background, occupier demand for prime properties in Q4 was supported by interest from major international retailers, and combined with limited supply, translated into stable rental values over the quarter. The conditions in the retail warehouse sub-sector are however testing, with landlords now granting longer rent-free periods in order to retain tenants and keep high and stable headline rents.

While new shopping centre provision in 2011 improved slightly from 2010, the development pipeline for 2012 is distinctly more constrained. Currently, availability of retail spaces tends to be limited on well known high streets and in good shopping centres; however, it improves when moving out of the main thoroughfares of the major cities, with space in certain out-of-town locations more readily accessible.

INVESTMENT FOCUS The exact number of transactions and trading volumes is difficult to measure given that many deals are completed off market; however, activity in the investment market in Q4 retained the momentum built during the year. Indeed, total trading volumes estimated for the fourth quarter were identical to Q3, with €110 mn of retail assets traded. The property market continued to be dominated by domestic investors, with the share of acquisitions by foreign players falling further. Prime yields remained largely unchanged, with the exception of a select number shopping centres in Zurich, where values softened by 10-25 bps.

OUTLOOK While the economic environment in 2012 is not expected to be conducive towards higher consumer spending, rental values will remain stable in prime locations. Downward pressure will be limited to prime retail warehouse properties in Geneva and Lausanne, as well as other unattractive secondary pitches. On the other hand, yield stabilisation is anticipated in all prime retail sub-sectors.

MARKET OUTLOOK

Prime Rents: Stable prime values, but with potential falls in certain retail warehouse locations.

Prime Yields: Unlikely to see adjustments in the short term.

Supply: Tight supply in prime locations, exacerbated by a limited shopping centre pipeline.

Demand: Active international demand for prime pitches, but subdued interest in secondary locations.


HIGH STREET SHOPS Sfr SQ.M/YR

€ SQ.M/YR

US$ SQ.FT/YR


Zurich (Bahnhofstrasse) 8,000 6,590 795 5.9 0.0

Geneva (Rue du Rhône) 4,000 3,295 397 2.7 0.0

Basle (Freie Strasse) 2,900 2,389 288 3.0 3.6



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Zurich (Bahnhofstrasse) 4.50 4.50 4.50 5.00 4.00

Geneva (Rue du Rhône) 5.00 5.00 5.00 5.75 5.00

Basle (Freie Strasse) 5.20 5.20 5.75 5.75 5.20


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Switzerland 5.30 5.30 5.50 6.25 5.25 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4.00%

5.00%

6.00%

7.00%

8.00%



SWITZERLAND

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW The Turkish economy continued to outperform the rest of the continent as GDP growth remained dynamic in Q3, rising by 8.2% year-on-year and by a seasonally and calendar adjusted 1.7% over

the previous quarter. Strong consumer spending was again one of the main contributors behind increased activity and this was reflected in retail sales, which rose an impressive 16.8% on the same period last year, higher than the revised rate of 12.4% recorded in Q2.

OCCUPIER FOCUS The turnover figures achieved by high street and shopping centre operators were nonetheless lower than expected, exerting downward pressure on rental values over the quarter. Strong consumer spending was, however, evident in Istanbul’s premier locations. Indeed, occupier demand for prime retail space remained generally stable, with active interest from foreign retailers eager to occupy central locations. In addition to the aforementioned increase in spending, footfall was also higher towards the end of 2011.

The year-end also witnessed an increase in retail provision, with approximately 300,000 sq.m of new space added to the market. Some of the most significant openings included: Arena Park and Akbatı in İstanbul, Atlantis Batıkent in Ankara, Diyarbakır Ninovapark, Bolu Highway Outlet and Niğde Yaşam Park.

INVESTMENT FOCUS Notwithstanding an exceptionally strong start to the year, there was a distinct dearth of investment activity in the fourth quarter, with no retail transactions concluded. Total trading volumes for the year reached approximately €379 mn, with the most significant deals the acquisitions of Marmara Park and Forum Trabzon shopping centres for €213 mn and €136 mn respectively. Prime yields remained largely unchanged, with the exception of selected high streets in Izmir and Ankara, which saw values harden by 25 bps.

OUTLOOK Total retail supply is predicted to reach 8 mn sq.m by the end of 2012. In addition, there are another 2 mn sq.m of GLA in the planning stage, anticipated to come to the market within the next five years. Slower economic activity in the country and Europe, combined with elevated inflation, higher lending rates and pessimistic consumer sentiment will act as a drag on the sector, with prime rents expected to fall in 2012.

MARKET OUTLOOK

Prime Rents: Prime rents expected to fall on the back of challenging conditions.

Prime Yields: Minor corrections cannot be ruled out, but yield stabilisation to prevail.

Supply: Substantial new supply of retail space in the pipeline.

Demand: Strong interest in prime locations to offset slower activity elsewhere.


HIGH STREET SHOPS US$ SQ.M/MTH

€ SQ.M/YR

US$ SQ.FT/YR


Istanbul 250 2,311 279 15.8 19.0

Izmir 65 601 72 3.4 -3.0

Ankara 80 739 89 5.9 0.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Istanbul 7.25 7.25 7.50 14.50 7.25

Izmir 10.50 10.50 10.75 14.50 10.50

Ankara 10.25 10.50 10.50 15.50 10.25


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Istanbul 7.75 7.75 8.50 14.50 7.00 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE


-30.0%

-15.0%

0.0%

15.0%

30.0%

4.00%

6.00%

8.00%

10.00%

12.00%



TURKEY

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011



OVERVIEW Retail sales in Q4 were largely positive, culminating in an annual expansion of 2.6% in December. Buoyant clothing, textile and footwear sales were key drivers behind the latest figures, while sales of household

goods remained depressed.

OCCUPIER FOCUS Occupier demand in Central London continues to be fuelled by luxury and international brands. Supply remains tight, with prime leases attracting substantial premiums and rents still rising. Parts of the South East and Greater London are also benefiting from consistent retailer interest, with prime shopping centres and towns such as Brighton, Guildford and Winchester particularly sought-after, which is reflected in the vacancy rates and completed transaction terms. Elsewhere in the country however, demand is sporadic for all but the best shopping centres, cities and strong market towns, with larger units faring better than standard shops, and discount operators driving demand. Consequently, prime rents have either remained static of softened slightly over the quarter, while in secondary locations values have fallen and incentives softened.

INVESTMENT FOCUS Demand for prime high street assets remains reasonably healthy, with a range of UK institutions, REITs and overseas investors still keen to increase their exposure. Interest is, however, highly specific, with covenant strength, location and multi-let assets a prerequisite for most. The traditional surge in disposals before the year-end failed to materialise and demand for secondary stock is isolated, only sustained by opportunistic funds and private investors. Meanwhile, activity in the shopping centre market was subdued, with both demand and supply at moderate levels. While interest for prime stock is still evident, it is somewhat more measured, with REITs no longer as acquisitive. UK institutions still have scheme requirements, particularly in the South East, but they are cautious on pricing.

OUTLOOK Amid mixed indicators, the economic landscape is anticipated to remain volatile. The unemployment rate over the three months to November edged up to 8.4%, the highest figure in over 16 years. However, inflationary pressures are easing, potentially supporting real wage growth and consumer spending. The negative Christmas period forecast by many proved also largely unfounded, with several brands recording encouraging results and solidifying their position. There are areas of growth potential therefore but short term at least the market will remain challenging for occupiers and investors will be highly selective.

MARKET OUTLOOK

Prime Rents: Growth in central London, but subdued elsewhere, with values either static or falling.

Prime Yields: Shopping centre and high street yields expected to soften overall

Supply: Limited in prime locations; but rising in secondary areas.

Demand: Demand to be more measured, constrained by tougher economic conditions.


HIGH STREET SHOPS ZONE A £ SQ.FT/YR

€ SQ.M/YR

US$ SQ.FT/YR


London (City) 220 1,446 174 -2.5 0.0

London (West End) 965 7,461 900 5.9 1.6

Manchester 250 1,643 198 -5.1 0.0

Birmingham 250 1,643 198 -4.8 0.0

Leeds 250 1,643 198 -3.9 0.0

Cardiff 225 1,479 178 -5.6 0.0

Edinburgh 200 1,772 214 0.0 5.3

Glasgow 255 2,259 272 0.4 2.0

RETAIL WAREHOUSING £ SQ.FT/YR

€ SQ.M/YR

US$ SQ.FT/YR


London (Bulky goods) 32.50 419 50.5 -1.5 8.3

Edinburgh (Bulky goods) 20.00 258 31.1 -7.8 -7.0



CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

London (City) 5.25 5.25 5.50 6.50 4.75

London (West End) 3.00 3.00 3.00 5.50 3.00

Manchester 5.25 5.25 5.25 6.75 4.25

Birmingham 5.75 5.75 5.75 6.75 4.25

Leeds 5.25 5.25 5.25 6.25 4.25

Cardiff 5.25 5.25 5.50 6.50 4.00

Edinburgh 5.25 5.25 5.50 7.00 4.00

Glasgow 5.00 5.00 5.00 6.75 4.00

RETAIL WAREHOUSING (FIGURES ARE NET)

CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Solus – Bulky goods 6.00 6.00 6.00 8.50 4.50

Park – Open consent 5.25 5.25 5.25 7.25 4.00


CURRENT QUARTER

LAST QUARTER

LAST YEAR

10 YEAR HIGH LOW

Regional Centre 5.50 5.50 5.50 7.00 4.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.


UNITED KINGDOM

RETAIL SNAPSHOT

MARKETBEAT


Q4 2011

economic marketbeat snapshot - cover · vehicles and motorcycles) fell 1.6% year-on-year in october...

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