EUROPE - Shopping centres will continue to attract cross-border property investments because they offer secure income and low risk, according to René Tremblay, CEO of Ivanhoe Cambridge.
Ivanhoe is a property management subsidiary of the CA$237bn (€175bn) Caisse de dépôt et placement du Québec, Canada's largest pension fund.
Presenting unpublished research conducted by The European Shopping Centre Trust and the International Council of Shopping Centres (ICSC), he described consumption, which accounts for 60% of European GDP, as "backbone and catalyst" of European growth. Shopping centres account for around 25% of retail spend and will account for €200bn by 2017.
Apart from "record levels" of investment in retail -- shopping centre investment was €25.7bn in 2006 -- Tremblay pointed out that shopping centres had a 20% growth in cross-border real estate investment in recent years.
"Shopping centres are popular with cross-border investors because they provide large, good-quality assets, benefiting from secure incomes and they're relatively low risk compared to alternative real estate assets," he said.
"Shopping centres also have attracted investors, directly or indirectly through real estate investment trusts, because of their relatively strong investment returns in many European countries. Consequently, pension funds, insurance companies and other institutions, and the consumers who pay into these, are increasingly dependent on the performance of shopping centres," added Tremblay.
Europe has 5,700 shopping centres, with a 50% increase in floor space since 2000. An additional 500 have been pipelined between 2006--2009 mainly in EU accession countries. Pipeline projects will double supply in Central and Eastern European markets as part of retail-led town and city-centre regeneration projects.
"For retailers, shopping centers are a good platform for growth, especially in new markets," said Tremblay. "Dramatic growth [in the retail sector] has coincided with or been caused by the rapid growth in the development of shopping centres in Europe."
Despite evidence of a decline in consumer confidence, Tremblay claimed European retail would outstrip GDP over the next decade as the retail sector becomes "an increasingly more important driver of economic activity. This will be especially true in the EU-accession countries."