Four years into the crisis, there is no escaping the stark reality. Consumer spending power remains pressured across Europe, borrowing constraints are holding back new retail developments and a growing supply of existing stock around the Continent is becoming obsolescent. Add to that the acceleration of ecommerce sales and we have all the ingredients for a perfect storm, as Adrian Powell, DTZ’s new head of EMEA retail, points out in the November issue of PropertyEU. Weak, if any, rental growth and trophy assets disappearing for the foreseeable future into the hands of sovereign wealth funds and other equity-rich players: this is the new norm.
Four years into the crisis, there is no escaping the stark reality. Consumer spending power remains pressured across Europe, borrowing constraints are holding back new retail developments and a growing supply of existing stock around the Continent is becoming obsolescent. Add to that the acceleration of ecommerce sales and we have all the ingredients for a perfect storm, as Adrian Powell, DTZ’s new head of EMEA retail, points out in the November issue of PropertyEU. Weak, if any, rental growth and trophy assets disappearing for the foreseeable future into the hands of sovereign wealth funds and other equity-rich players: this is the new norm.
Some investors are less prepared than others to accept the post-crisis reality of anaemic growth and are devising new strategies to boost their business. Sonae Sierra is a case in point. The Portuguese retail specialist has exhausted all opportunities in its home markets on the Iberian pensinsula and is now extending its frontiers in an ongoing effort to create value. Germany is still on its agenda thanks to a multitude of possibilities for redeveloping and refurbishing outdated malls like the conversion and expansion of the old Karstadt site in Solingen which it is undertaking in partnership with Dutch developer MAB.
Romania is also on the radar - the Portuguese developer recently formed an alliance with Caelum Development to build a mall in Bucharest and industry watchers claim the market is the next best destination in the region medium term after Poland. Sonae Sierra has its sights on even more exotic destinations including Brazil and North Africa, in particular Morocco and Algeria.
In other emerging countries in CEE and Turkey, the likes of Multi and ECE have already staked out the mall markets, but Russia has so far remained pretty much a no-go area for foreign players with the notable exception of Vienna-based Immofinanz. But the race for this retail market is heating up, at least on the advisory side. In early November Jones Lang LaSalle poached a team of 25 retail experts from Colliers International in a retaliatory bid spurred by Cushman & Wakefield which in late October hired JLL’s nine-strong Moscow team. Colliers has now hit back: the company announced last week that it has hired Cushman & Wakefield's original team in Moscow who handed in their notice following the appointment of the ex-JLL team headed by Maxim Karbasnikoff.
While the game of musical chairs continues among the leading brokers in the Russian capital and JLL and Colliers scramble to retain their market leadership in this market, the underlying message behind these offensives is clear. With a market of 140 million consumers, strong consumer spending and growing interest from international retailers and investors alike, Russia is anything but the new norm.
