The ongoing appetite from international retailers to pursue aggressive cross-border strategies, continues to drive returns in the high street retail sector across core European markets despite challenging market conditions.
According to research carried out by SWIP and CWI on the European Urban Retail markets, the high street retail sector remains the most attractive based on its defensive characteristics driven by supply constraints and low levels of volatility. As experts in real estate, SWIP and CWI forecast that the high street retail sector can offer investors attractive enhanced risk-adjusted rates of return compared to other areas of the market over the medium to longer term.
Stewart Cowe, Investment Director, Property Research and Strategy at SWIP comments:-
“Despite the fragility of the global economy and the unnerving influence of the peripheral European markets, the core markets of Europe remain well positioned to deliver attractive medium to long term returns. Household and corporate balance sheets on the whole remain fairly robust and as consumer demand continues unabated for branded and luxury products, retailers continue to seek prime assets in prime locations. Our in-house research forecasts returns from prime shops in Western Europe will deliver 7%pa over 2011-2015 which, set against our forecasts for inflation of around 2%pa and the current economic backdrop, is a very acceptable return.”
Momentum in the high street retail sector is in part being driven by the flight to quality where successful retailers are snatching up rare opportunities both on the prime pitch and in near core locations where they can look to further enhance their brand status. Anglo-Saxon brands in particular are targeting the core European markets looking to extend their presence into the continent. The German market, as one of the largest European real estate markets, is attracting ambitious retailers to its multi-centres offering retailers the opportunity to establish themselves across Germany’s six key cities.
Xaviere Roudeix, Associate Director, European Research, at CWI comments:-
“As property investors, we believe that the high street sector across the main markets of France, Germany, Sweden and the UK will throw up a number of exciting opportunities. Strong rental growth driven by buoyant economies in these core European markets will generate attractive total returns from prime shop units across key city centres.”
SWIP and CWI’s property research teams carry out in-depth research across both the UK and European commercial property markets.
For further information please contact:
For further information please contact:
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Kahrene Lawrie |
Helen Basil |
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Notes to Editors
1 Source: SWIP/JLL/CWI
Scottish Widows Investment Partnership
• SWIP’s ultimate parent is Lloyds Banking Group, one of the largest financial services groups in the UK.
• SWIP has a geographically diverse client base with alliances and clients in the UK, across Europe, USA and Japan.
• SWIP is one of the UK and Europe’s largest fund managers with £136.9billion funds under management (Source: Internal, as at 30 September 2011).
• SWIP has a broad client base, managing assets for Pension Funds, Charities, Local Authorities, Life Funds, Unit Trusts, OEICs, Off-Shore Funds and Specialist Funds across all major asset classes.
• SWIP is authorised and regulated in the UK by the Financial Services Authority and is entered on their register under number 193707 (www.fsa.gov.uk).
• Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future.
Cushman & Wakefield Investors (CWI):
• Cushman & Wakefield Investors is the independent investment management arm of Cushman & Wakefield (C&W). CWI has three offices: London, Paris and Frankfurt and currently has €1.7 billion of assets under management. It provides complete property investment management services to a range of institutional clients including Corporate, State and Local Authority Pension Funds, Charities, Family Trusts, Friendly societies and Family Offices. C&W is the world’s largest privately-owned real estate services group, active since 1917 with global coverage through 230 offices in 60 countries and more than 13,000 employees.