The European retail property sector may be losing its lustre but luxury goods retailers are adding some shine as they become less of a niche The clear skies during the Mapic retail fair in Cannes in mid-November did much to temporarily disperse the sense of gloom in the European retail sector. But despite the autumn sunshine, the overriding sentiment was nevertheless that anaemic or even negative economic growth and rising unemployment continue to cast long shadows over much of the European property industry.
The European retail property sector may be losing its lustre but luxury goods retailers are adding some shine as they become less of a niche
The clear skies during the Mapic retail fair in Cannes in mid-November did much to temporarily disperse the sense of gloom in the European retail sector. But despite the autumn sunshine, the overriding sentiment was nevertheless that anaemic or even negative economic growth and rising unemployment continue to cast long shadows over much of the European property industry.
As core investors like CBRE Global Investors struggle to find opportunities in a shrinking field of opportunity, the countries now basking in the sun lie beyond European shores, Barbara Somogyiova, director of international expansion at List Fashion Group, emphatically told a panel discussion during the fair. ‘Europe is losing its lustre. Middle Eastern and Asian markets are more willing to take on new brands. Our number three priority is not Europe, it’s South America. And 70- 80% of my colleagues think the same.’ Somogyiova was referring to the marketing opportunities for a small and relatively unknown Italian fashion brand, but her view also sums up the perception of many international investors looking at Europe. With the eurozone now officially in recession and protesters in major European capitals heading for the streets, there is a real risk that foreign investors now view Europe as a big cemetery with great art, oted Damien Wild, panel moderator and editor of Estates Gazette. Not all European markets are under water and not all American visitors think they are, but the case for European retail investment contains many caveats, acknowledged
Mike Rodda, partner in charge of cross-border retail investment at Cushman & Wakefield. ‘The pockets of opportunity for core investors in Europe are smaller today than they were a year ago. Today I would place a bigger question mark against parts of secondary locations in France. Core investors need to be more selective.’ Despite the sombre climate, attendance at this year’s edition of Mapic rose by more than 6% to 8,500 delegates including 2,400 retail epresentatives and 850 investors, with 400 retail brands, including Calvin Klein Jeans, Costa, Tiffany & Co and Dairy Queen making their first appearance at the fair. The US delegation of 113 companies represented a 39% increase on 2011 with major US names on the exhibition floor including Howard Hughes, Vornado Realty Trust and Thor Equities. But although Chinese and Middle Eastern retailers are reportedly setting their sights on London, most mature countries in Western Europe continue to struggle with a growing divergence between strong core and weak secondary locations. Newer markets like Brazil with a young population and a growing middle class are, on the other hand, rising on the wish lists of retailers and investors alike. South America is definitely the flavour of the moment, Rodda confirmed. ‘Brazil is the new buzzword at Mapic in terms of retailers and investment. I have spent a lot of time in Sao Paolo this year and doing business in Brazil is a mile easier than in Europe. Access to capital is far easier than in Europe. It reminds me of the European market in 2004-06 - but without the low cost of finance.’ Closer to home, Turkey’s star is also shining as an investor darling, a status underscored by the announcement at Mapic that the country accounted for no less than one third of the 12 ICSC European finalists for the 2013 shopping centre awards. Outlet centre specialist McArthurGlen is looking ‘seriously’ at the Turkish market, CEO Gary Bond told PropertyEU.
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