Retail investors set to soften their hard approach to core only

Historically, non-European investors have tended to target super prime assets in London, Paris and other major centres, but that is set to change in the coming year, according to Chris Gardener, senior director, EMEA Retail Investment at CBRE.

'If there is a prediction for 2015, you’ll find them reducing their hard approach to core only,' he told PropertyEU's Retail Outlook Briefing held recently at the Mapic fair in Cannes. 'If you’re looking at the shopping centre sector, you don’t have to be in Paris, you have to be in a good catchment area with a good proximity, spending potential and convenience. I think that throughout the next year or two we will see a lot more Asian and American capital going into markets that may not be completely secondary, but which may surprise us when we look back to where we are today.’

Looking ahead, one of the key issues that landlords will need to come to terms with according to Jaap Gillis, Chief Executive Officer, Bouwfonds Investment Management, is the basis for determining rents. ‘Turnover-based rents in this age of online sales is no longer in touch with our times. But how do we capture online and footfall sales? That is a hot issue that we need to address in the future. There is currently no balance between the two, even at big corporations.’

Indeed, there is no room for complacency, Gillis warned. ‘If you think things are going well, they may not still be going well in five or 10 years time. You mustn’t fall asleep. Discounters are now grabbing a lot of market share, companies without a brand name are increasing their market share and are doing very well,. That trend will continue. The whole way of branding is changing. If you want to promote your own brand, you must open your own stores and I don’t mean through a franchise. That will totally change the environment.’

Online sales offer an opportunity to enhance physical sales, argued CBRE’s Gardener. ‘We’re still seeing most retailers putting their biggest budget towards their physical store environment. And online sales can provide a complementary element where consumers are picking up or returning their goods. Physical retail can fight back, retail is driven by experience and it is a leisure activity in a number of countries. Retail can fight back with augmented reality and other technology as much as online can threaten it. We should start to become more comfortable with that environment.’