Savills has revealed the premier shopping center locations in Europe for investors, in conjunction with data provided by Oxford Economics. It finds that France ranks top followed by Germany, UK, Belgium and Poland.
The research benchmarks five key criteria for the 18 European markets surveyed including sales prospects, GDP volatility over 15 years, consumer spending volumes, letting area ratio to catchment and average rental growth figures. Taking these factors into account, France tops the table due to its economic stability, low GDP volatility and anticipated sales growth of 2.7% pa between 2011 and 2016. Prime shopping center rents currently stand at 2,000/m²/year.
Poland which currently ranks fifth is, Savills suggests, a market that could see the most growth due to forecast increases in consumer spending but also a fast growing population. Its retail sales prospects are one of the best of those countries surveyed with a 5.16% average growth (against EU average of 2.2%) forecast between 2011-2016 and limited shopping center stock 214 m² per 1,000 habitants.
Giles Wilcox, Head of Cross Border Investment at Savills, says: "There are many cases of excellent shopping centers across Europe that represent a good purchase opportunity. Such opportunities can definitely take investors into new markets across substantial geography. When identifying geographical areas to target it is clear that aside from property fundamentals, consumer spending figures and forecast GDP growth must be taken into consideration. Investors will also continue to be attracted to prime well let and either dominant or sustainable shopping centers. Dominant shopping centers offer the benefits to invest substantial equity into a single deal, with risk and volatility somewhat hedged and plenty of room to benefit from improving economic conditions."
The data notes that Germany currently ranks second in terms of its consumer spending market and although shopping center stock is limited (159 m² per 1,000 inhabitants), retail sales are not expected to grow fast at an average of 1.94% pa. The UK will see growth of 2.93% pa and has seen rental growth since early 2010 with London prime shopping center rents averaging 6,909/m²/year - the highest in Europe. At number four, Belgium GDP is very stable and expects to see retail sales growth of 2.1% pa on average over 2011-2016.