EUROPE - European shoppers could take two years to catch up with the global economic recovery, according to CB Richard Ellis.

An upward trend in consumer and retailer sentiment belies consumer cautiousness about employment prospects, the property advisory firm said in a report this week. Retailers are also proving more cautious than earlier in the decade in their pursuit of strategic expansion plans - though they are increasing their demands for incentives such as rent-free periods in negotiations with landlords.

At just over 1%, Europe falls significantly behind an IMF-forecast global growth rate of 4.2. The report describes government finances in some countries - notably Greece - as "an unwelcome addition" to a "patchy and hesitant" recovery.

Yet Nick Axford, head of research and consulting for EMEA at CBRE, pointed out that stability and growth are not translating into significant recovery in retail sales even in countries with strong growth, such as Australia.

The main risk six months ago was that the economic recovery would be slower than expected, with weaker than expected demand.  Now the major concern is the macro-fiscal environment. Imports are more expensive within the eurozone, and Europe is facing austerity measures and reduced public spending.

"The threat of rising interest rates is making consumers with credit cards and mortgages cautious," said Axford. "Even when the economy starts to grow, how long before consumers believe their jobs are safe? Unemployment could rise to two years after the end of a recession."

He added: "Even if consumers are willing to buy a new dress, they won't go out on a big spending spree. They'll hold back, and save instead of spending. It takes time to translate economic recovery into consumer spending."

The report pointed to a tighter definition of prime in many markets. However, further finance for new developments in secondary locations remain difficult to secure. With the development pipeline likely to be limited to some time, at least in emerging markets retailers are rethinking the timing of their expansion plans because of a paucity of retail space.

In the meantime, the report said, the forecasting terrain has shifted from regional and national markets to cities and even micro-locations, "which often run contrary to the picture at national or regional level".