Q1 2009

European Retail
Commentaries
For internal use only
2 On Point • European Retail Commentaries • Q1 2009 For internal use only

Austria The Metro group disposed of its Adler fashion outlets in August 08,
closing 20 stores in the process. Strong interest in the units comes
from expanding retailers Fressnapf, kik, dm and Interspar.

Consumer and Retail Trade Confidence Short-term outlook on prime rental growth

Rental Growth
20

15 Unit Shops Ö
10

5
Shopping Centres Ö
0 Retail Warehousing Parks Ö
Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-5

-10

-15 Development trends and notable openings

-20

-25
Consumer Confidence Development in the Austrian market remains limited due to its
Long Term Consumer Confidence Average maturity. Urban regeneration projects and expansion of existing
Retail Trade Confidence shopping centres remain the major focus. ECE has announced as
Long Term Retail Trade Confidence Average
the official partner of ÖBB for both the Westbahnhof and
Hauptbahnhof developments (17,000 sq m and 20,000 sq m retail
Source: The European Commission respectively). Site clearance has begun on Westbahnhof, and
construction has also begun on the Wien Mitte development (BAI
Key Economic & Consumer trends and Bank Austria) which is due to provide 28,000 sq m of retail. The
Graz city centre scheme ‘Stadtgalerie’ proposed by ECE has
National elections took place in Austria on 28th September, with the overcome strong opposition to be approved, and construction is due
major ÖVP and SPÖ parties losing significant ground to the right to start in 2009.
wing FPÖ and BZÖ. Despite significant support, the SPÖ emerged
with a slim lead ahead of the ÖVP, and the parties have most Investment trends
recently agreed to cooperate. The new government was sworn in, in
early December 2008.
Q4 2008
With global economic uncertainty, a strong theme of the coalition Retail Investment Volume* €6.6 mio
negotiations is inflation control and tax reforms, with specific Change Y-o-Y 69%
reference to items such as VAT on groceries. It remains to be seen *Includes shopping centres, retail warehouses, supermarkets and factory outlet
to what extent these reforms are actually implemented, and what the centres, and deals over €5 million in value.
impact on the Austrian economy is likely to be.

Since mid 2008 the retail investment market has seen very few
Retailer Demand
transactions. The German open-ended funds remained active in the
market right up until the closures in October, and intend to return to
Shopping Centre RW Parks Unit Shops the market as soon as the wider fund issues are resolved. There are
Primary few distressed sales emerging at present, and we expect retail
investment activity to remain somewhat suppressed into 2009,
Secondary picking up as and when the German funds return to the market and
the Austrian banks resume lending.
Low High

Occupier trends
Contact: Vicky Bayer +43 1 599 99 402
International multiples and strong national chains continue to drive
occupier demand in the top locations. The existence of historic,
protected leases continues to prevent a small element of space in
the very top locations coming to the leasing market, and makes it
even more difficult to access prime product.

Economic uncertainty has however begun to take its toll on a small

number of retailers – troubled Austrian retail multiple Schöps
announced ‘insurmountable’ financial difficulties in late 2008, and
has since been taken over by the investor Al Wazzan. Plans to
restructure the chain of 95 outlets are in place.
 On Point • European Retail Commentaries • Q1 2009 For internal use only 3

Belgium Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence
Shopping Centres Ö
Retail Warehousing Parks Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
15
10
5
0
Development trends and notable openings
-5
-10
-15 Notable openings Q4 2008:
-20
-25
- The Ikea (located on ‘the Loop’-site) in Ghent has recently
-30 opened its doors. It comprises about 30.000 sq m GLA.
-35
Consumer Confidence - The B-Park in Bruges, a 38.000 sq m retail park with Carrefour
Long Term Consumer Confidence Average
as anchor, also opened in Q408
Retail Trade Confidence
Long Term Retail Trade Confidence Average
About 2 million sq m of retail projects are planned for the next 6
Source: The European Commission
years. More than half however are still in design phase and may
never be realised. Delays on some other projects are also likely to
Key Economic & Consumer trends occur due to the difficulty in obtaining the necessary permits and the
effect the current economic climate has had on attaining finance.
Consumer confidence reached its lowest level for 15 years in
December 2008. Nevertheless retail sales have remained fairly Shopping centres form the majority of the pipeline. Several
stable with an unexpected strong year-end. extensions are being studied and two major shopping centres are
scheduled to open in 2009: K in Kortrijk (34,000 sq m) and Media
It remains to be seen however how the sector will perform in the Cité (41,000 sq m) in Liège.
short term. Decreased disposable income, higher unemployment
and more difficult financing for growth of retail chains could lead to
failures amongst retail businesses. Investment trends

Retailer Demand
Q4 2008
Retail Investment Volume* €130 mio
Shopping Centre RW Parks Unit Shops
Change Y-o-Y 32%
Primary *Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value.
Secondary
The total retail investment volume in 2008 reached €794 million, of
Low High which €186 million came in Q4. The most important investment deal
in Q4 08 was the Fortis purchase of the city centre shopping mall
‘Muntcentrum’ in Brussels for approximately €45 million.
Occupier trends
The high street market is still dominated by local private investors
The lettings market is still active on whole despite the economic who remain very active. On prime locations demand still heavily
climate and decrease in consumer purchase power (or sentiment exceeds supply. For the shopping centres and retail parks the most
active investors are the Belgian institutional investors and the
of). International brands continue to be a key driver with, for
Belgian REIT’s. The REIT Ascencio for example bought a
example, New Look set to continue their expansion across Belgium
9.300 sq m retail park in Jemappes at a 6.5% yield.
in 2009.
Market sentiment is that yields have indeed softened but there is
Rental levels remain stable across all retail sectors but key-monies limited evidence for this as volumes remain low.
are seeing signs of downward pressure.
Contact: Wim Ottevaere +32 25 502 519
4 On Point • European Retail Commentaries • Q1 2009 For internal use only

Czech Republic Short-term outlook on prime rental growth

Rental Growth

Consumer and Retail Trade Confidence Unit Shops Ö

Shopping Centres Ö
40
Retail Warehousing Parks Ö
30
Development trends and notable openings
20

10
Notable openings Q4 2008:
0
- Arkády Pankrác, Prague, SC, 39,800 sq m
Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-10
- City Park, Jihlava, SC, 24,000 sq m
-20 - Campus Square, Brno, SC/RP, 20,000 sq m
-30
Consumer Confidence
Long Term Consumer Confidence Average
2009 should see a reduction in the number of completions and new
Retail Trade Confidence projects entering the construction phase. Financing is becoming
Long Term Retail Trade Confidence Average more difficult to attain and retailers are demonstrating an increased
level of caution, making the leasing of new centres an increasingly
difficult task.
Source: The European Commission
Investment trends
Key Economic & Consumer trends
Q4 2008
The impact of the global economic crisis is felt across all market Retail Investment Volume* €50 mio
segments, resulting in rising unemployment and a decrease in
Change Y-o-Y -77%
consumer confidence and purchasing power. The CZK, after its
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
good performance in 2008, is now returning to previous exchange centres, and deals over €5 million in value.
rate values which will increase the price of foreign goods.
There was one deal closed in Q4 2008, the Varyada Shopping
Retailer Demand Centre for €49.6mio.

Shopping Centre RW Parks Unit Shops

Contact: Ondrej Vlk +420 224 234 809
Primary

Secondary

Low High

Occupier trends

Few market entries are expected in 2009, and are more probable on
high street more than in shopping centres.
Starbucks are strengthening their position rapidly on Prague’s high
street and Korres Athens is set to enter the market in Q1

Christmas trading showed that consumers were in denial of the

crisis as sales held up, buoyed by record breaking levels of Internet
sales.
 On Point • European Retail Commentaries • Q1 2009 For internal use only 5

Finland Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence
Shopping Centres Ö
Retail Warehousing Parks Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
30
25 Development trends and notable openings
20
15
10 Notable openings Q4 2008:
5 - Shopping Centre Entresse, Espoo, shopping centre, 12,000 sq
0
-5 m
-10 - Porttipuisto, Vantaa, retail WH, 15,000 sq m
-15
Consumer Confidence - 1st phase of Shopping Centre Ristikko, Helsinki, shopping
Long Term Consumer Confidence Average
centre, 6,500 sq m
Retail Trade Confidence
Long Term Retail Trade Confidence Average
- enlargement of Shopping Centre Sello including cinema
complex, restaurant area and Lidl discounter store
Source: The European Commission

No new major shopping centre developments have been announced

Key Economic & Consumer trends
lately. The second phase of Shopping Centre Ristikko will be
completed during this year as well as new Prisma hypermarket next
The Federation of Finnish Commerce estimates retail sales growth to Itäkeskus Shopping Centre – both in Helsinki. Also the re-
in 2008 to have been approx. 5.5% YOY (without car sales). Growth development of Prisma hypermarket in Kannelmäki will be opened
is expected to decrease to around 3% in 2009 as a result of the this year signalling the completion of the first phase of the
economic crisis. Despite Finnish consumers still being in a relatively forthcoming shopping centre.
strong economic situation, news of the looming recession has
rapidly affected retail behaviour and consumption patterns. Despite In the retail warehousing sector, Tammisto continues developing
Christmas sales being estimated to grow by 3% in 2008, the and Porttipuisto is strengthening its position as a home furnishing
increased caution from consumers meant sales stayed at the same centre.
level as a year before (€950 million). The consumer confidence
indicator (Stat Finland) also indicates gloomy expectations in terms The development pipeline is still large though projects are now
of the economy and unemployment. Despite negative expectations mostly on hold or postponed. The uncertain economic situation has
consumers still have an optimistic view to their own economic made both developers and retailers cautious.
situation and saving possibilities.
Investment trends
Retailer Demand
Q4 2008
Shopping Centre RW Parks Unit Shops Retail Investment Volume* €237 mio
Primary Change Y-o-Y -9%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
Secondary centres, and deals over €5 million in value.

Low
Occupier trends
Kenzo opened its new lifestyle store in November in the CBD of
Helsinki – the brands first concept store in the Nordics. Elsewhere,
Kesko (one of the largest retailers in Finland) established its new
discounter home electronic chain Konebox, which combines a web
based sales platform with traditional in store sales.
High Investment activity remained relatively low in 2008, contrary to the
previous year. In Q4 2008 both vendors and purchasers were
predominantly Finnish. Purchasers were mostly local pension
insurance companies using their own equity, and developers were
the typical vendors. The products in Q4 transactions were largely
single assets; retail warehousing and local shopping centres
average lot size being €20-30 million. Most investors have adopted
a ’wait and see’ mentality with the availability of debt being highly
limited. At the same time, investment demand for assets outside of
the bigger urban areas is exceptionally low.

Contact: Tero Lehtonen +358 40 565 53 89

6 On Point • European Retail Commentaries • Q1 2009 For internal use only

France Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence
Shopping Centres Ö
Ö
15
10 Retail Warehousing Parks
5
0

In the short term, rents should remain stable. However a decline in

Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-5
-10
-15 rental values is expected in 2009 or 2010, after a very strong growth
-20
-25
in recent years. Some retailers are beginning to put pressure on
-30 rents as they engage in lease renegotiations.
-35
-40
Development trends and notable openings
Consumer Confidence
Long Term Consumer Confidence Average
Notable openings in Q4 2008:
Retail Trade Confidence
Long Term Retail Trade Confidence Average
- The retail park “Maisonément”, located in the new town of
Sénart (in the south of the Paris Region), has been delivered:
Source: The European Commission
42,000 sq m GLA with 40 stores specializing in household
goods, a service centre, and restaurants
Key Economic & Consumer trends
- “Quai d’Ivry” shopping centre, located in Ivry-sur-Seine (near
Paris), is now completed: 60,000 sq m GLA refurbished.
2008 has been far from spectacular from an economic sense as
- ALTAREA has opened the retail park “Les Portes de Guipavas”
France begins to feel the effects of the global economic downturn.
(37,000 sq m GLA), with the first Ikéa in the French region
Private consumption still withstands the economic crisis, despite a
Brittany.
rise in unemployment and a decrease in consumer purchasing
power. With the current market conditions many projects might be delayed
or put on hold. Developers are suffering from a lack of financing.
Reform of France’s trading laws (which occurred in 2008) should be However, the prime schemes should be delivered on time: five
able to open the market to more activity. And French President projects over 30,000 m² GLA are expected in 2009. Developers are
Nicolas Sarkozy presented in December its plan to revive the also now beginning to put greater emphasis on the quality of public
economy, which provides measures to boost the private transport, the commercial environment, and the location of the
consumption. scheme.

Retailer Demand Investment trends

Shopping Centre RW Parks Unit Shops Q4 2008

Primary
Secondary
Low
Occupier trends
Retailers are becoming more selective and focusing on the best
locations. Most of them have adopted a cautious attitude and have
put expansion plans on hold. Some international brands are
however set to open their first French stores in the capital with Cos
by H&M (Rue des Rosiers) and Sony Style (Av. George V) good
examples.
In 2008, big luxury companies have withstood the crisis whilst the
fast food sector is also performing well with turnover registering
steady growth. The convenience store concept has also been
increasing recently with the first of this kind (Monop’) has opening in
the subway at the Châtelet-Les Halles station.
Retail Investment Volume* €61 mio
Change Y-o-Y -78%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value.
High
The investment market continues to be affected by the financial
crisis, with only a limited level of transactions and yields moving out.
With the lack of transparency and declining confidence in the
market, investors are putting their decisions on hold and adopting a
“wait-and-see” strategy. The toughening of credit conditions
continues to restrict investment activity.
Therefore retail investment activity dropped significantly in 2008:
less than € 1 billion against €4.5 billion transacted in the same
period of 2007. Half of the total retail investment volume has been
made on transactions of less than € 30 million, with domestic buyers
dominating.
Contact: Sophie Benainous +33 1 40 55 85 15
 On Point • European Retail Commentaries • Q1 2009 For internal use only 7

Germany Short-term outlook on prime rental growth

Rental Growth

Consumer and Retail Trade Confidence Unit Shops Ö

Shopping Centres Ö
Retail Warehousing Parks Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Oct-06

Apr-07

Oct-07

Apr-08

Oct-08
Development trends and notable openings
15
10
5
0 Notable openings Q4 2008:
-5
-10
- My Zeil, Frankfurt, Shopping-Centre, 78.000 sq m (opening
-15
-20
date Q1 2009)
-25
-30
-35 Investment trends
Consumer Confidence

Long Term Consumer Confidence Average

Q4 2008
Retail Trade Confidence

Long Term Retail Trade Confidence Average

Retail Investment Volume* €412 mio
Source: The European Commission Change Y-o-Y - 66%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value.
Key Economic & Consumer trends
The worldwide financial crisis is still affecting the real estate
Consumer sentiment index (GfK) is forecasted to remain stable in investment market with investors adopting a "wait and see” strategy.
2009, however at a lower level than 2008. Inflation is further
declining. Prime high street properties with lot sizes of up to € 35 million in
strong cities are still in the focus of those who monitor the market.
Retailer Demand Demand remains stronger than supply for prime quality products.
The market for smaller retail warehouse schemes of around €5
Shopping Centre RW Parks Unit Shops million is low, whereas larger retail warehouse parks with lot sizes
around €10-25 million are still sought after. Domestic equity-strong
Primary institutional and private investors dominate the market.
Secondary The expected reopening of several frozen German open-ended
funds in Q1 could have a positive impact on investors' confidence.
Low High

Occupier trends Contact: Helge Zahrnt +49 (40) 350011269

Mobile phone companies as well as national and international

upmarket fashion retailers are actively looking for premises in prime
locations in top cities. Shopping centres are also of interest, but only
when they are located in the city centres and not on Greenfield site
(e.g. for Tommy Hilfiger, Hugo Boss).

No official Christmas trading figures have been released, but it is

estimated that the turnover has nearly reached the level of 2007.
The results in the fashion sector are seen as at bit weaker than last
year.

The most active retailers are German partners of international

franchise retail concepts such as Joint Ventures of the Otto-Group:
Lascana, Castro, Zara, Massimo Dutti and of franchise companies:
Komet und Helden
8 On Point • European Retail Commentaries • Q1 2009 For internal use only

Hungary Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence
Shopping Centres Þ
0
Retail Warehousing Parks Ö
Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-10

-20
Rents remained relatively stable during Q4 2008, though by the
-30
year-end a slight decrease had been registered. Existing tenants are
beginning to re-negotiate rental levels in their favour and look for fit
-40
out contributions (or even turnover rents).
-50

-60
Development trends and notable openings
-70 Consumer Confidence
Long Term Consumer Confidence Average
Retail Trade Confidence
As at the beginning of 2009, all planned developments are still going
Long Term Retail Trade Confidence Average ahead in Budapest, although some will face financial difficulties or
will have delays in opening. In the next two-three years it is
expected to have 3-4 new mixed-use developments completed.
Source: The European Commission
Away from the capital, there are several smaller concepts under
construction, primarily in the retail warehouse format.
Key Economic & Consumer trends
Investment trends
The economic situation of consumers is becoming increasingly
difficult as the financial crisis has direct impact on the household
budget. Real wages are declining and consumer prices are on the Q4 2008
up. Those brand-loyal customers tend to favour shopping in outlet Retail Investment Volume* €0 mio
centres rather than shopping centres. Change Y-o-Y -94%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
Retailer Demand centres, and deals over €5 million in value.

Shopping Centre RW Parks Unit Shops The retail sector has seen a dramatic fall of activity with a transacted
value of roughly €70m in 2008 (compared to €900m in 2007) and
Primary only two significant transactions. These were the sale of Tesco in
Becsi út from Raiffeisen Real Estate to Raiffeisen Capital and
Secondary Concorde’s purchase of Max City from TISRI, the furniture and
home appliances specialised mall on the outskirts of Budapest both
Low High for an estimated transaction price around €25m.

Occupier trends Contact: Andrea Marian +36 1 489 02 02

Due to the recent difficult economic situation across Europe retailers

are more selective regarding new projects and new market entries.
Despite the difficulties, new brands are still expected to enter to the
Hungarian market; however they are offering very conservative
commercial conditions and expecting contributions from landlords.

Key openings in 2009 will be VanGraaf who will open their first store
in Allée along with Massimo Dutti from Inditex. Pilgrim, Cielo and
Mötivi will also open their first units in Hungary this year.

The most expansive retailers present on the Hungarian market are

H&M, C&A, Charles Vögele, Deichman, Takko etc. Home wear
retailers are also expanding, though on a smaller scale.

Occupier interest in shopping centre schemes is declining whilst

interest in outlet centres and retail parks is increasing.
 On Point • European Retail Commentaries • Q1 2009 For internal use only 9

Ireland Short-term outlook on prime rental growth

Rental Growth

Consumer Sentiment Index Unit Shops Ö

Shopping Centres Ö
Retail Warehousing Parks Þ
Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08
Prime high street rents fell in Q4 2008 due to a marked decline in
120

100
market sentiment and trading figures. Whilst there is currently little
80
market evidence regarding the rental decline it is expected that
60
there will be deals in the market during 2009 to support it.
40

20
Development trends and notable openings
0

%Growth of GDP Notable openings Q4 2008:

- Southgate Centre, Drogheda. 22,000 sq m.
Source: IIB Bank/ESRI, September 2008 - Bettystown Town Centre. 16,062 sq m.
- Cashel Town Shopping Centre. 7,062 sq m.
Key Economic & Consumer trends
The weakening economy has hit consumer spending significantly
The latest figures from the CSO show that the volume of retail sales and may continue to do so in 2009. This may impact upon retailer
decreased by -7.3% year on year whilst the value of retail sales demand for shopping centre space and consequently development
decreased by -5.6% in the year to October 2008. The largest fall in activity.
the volume of sales in the year to October was in the furniture and
lighting market which fell by -23.8%. Falling demand has pushed Investment trends
inflation in Ireland down to 2.5% in November from 4.0% in October.
Q4 2008
Consumer sentiment improved in December with the KBC Bank
Ireland/ESRI Consumer Sentiment index increasing to 50.2 (from Retail Investment Volume €0
44.8 in November). This reflects the impact of the recent significant Change Y-o-Y -82%
reduction in interest rates and oil prices on the spending power of
Irish households. There was no investment in the retail sector in Ireland during Q4
2008.
Retailer Demand
Contact: Gemma Sturdy +353 1 6731600
Shopping Centre RW Parks Unit Shops
Primary

Secondary

Low High

Occupier trends

Given the current economic climate retailers that trade in the

‘reduced cost’ end of the market are reportedly trading well, these
include retailers such as TK Maxx, Pennys, Aldi & Lidl.
There have been rumours that the grocery retailer Asda is
considering moving into the Irish market and that Aldi and Lidl are
hoping to undertake expansion plans.

Retailers who have left or reduced their presence in the market in

2008 include Habitat, Mango, Sasha, Daisy & Tom and The
Mortgage Store who have closed eight high street stores. Further
retailer departures from the market in 2009 include Land of Leather,
Doctor& Herb and Zavvi.
10 On Point • European Retail Commentaries • Q1 2009 For internal use only

Italy Short-term outlook on prime rental growth

Rental Growth

Consumer and Retail Trade Confidence Unit Shops Ö

Shopping Centres Þ
Retail Warehousing Parks Ø
50

40 Development trends and notable openings

30

20
Notable openings Q4 2008:
10

0
- Gli Orsi, Biella, commercial gallery, 40.700 sq m GLA
- Stella Shopping, Oderzo (Treviso), retail park, 30.000 sq m
Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-10

-20
-30
-40
Consumer Confidence
Long Term Consumer Confidence Average
Retail Trade Confidence
Long Term Retail Trade Confidence Average
Source: The European Commission
Key Economic & Consumer trends
The Italian macroeconomic scenario is still a concern. GDP is
forecasted to fall by 2% during 2009. Consumer confidence
continues to fall and is forecast to remain subdued over the short
term.
Retailer Demand
Shopping Centre RW Parks
Primary
Secondary
Low
Occupier trends
Very few retailers are expanding, though Conbipel, Oviesse, Bonprix
(wearing apparel) and Deichmann bucking this trend. While in
previous quarters we could see many international brands
expanding in Italy (above all French brands), in this quarter most of
them are going to slow down their development of new spaces.
Christmas trading results have been positive, but they have been
limited to a very short period. Furthermore, the decrease in trading
during other periods was significant, so the impact of the strong
Christmas has been limited.
Demand for space in prime shopping centres remains high, but
secondary locations are registering vacant units. Retailers are now
being more selective in looking for the best schemes for new space.
The negotiation length for deals is increasing and achieved rents are
favouring tenants. For medium surfaces, both in Shopping Centres
and in Retail Parks, the biggest tenants are increasingly asking for
turnover rents. High Street demand remains high in Rome and
Milan, but retailers are likely to pay high key monies.
GLA
- Le Vigne, Castrofilippo (Agrigento), commercial gallery, 29.000
sq m GLA
- Fidenza Shopping Park, Fidenza (Parma), retail park, 16.500
sq m GLA
New developments have slowed and many are now being
postponed in light of the economic crisis.
Investment trends
Q4 2008
Retail Investment Volume* €162 mio
Change Y-o-Y -61%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value. This information is revised after the press
release.
Unit Shops
Investment activity slowed for almost all sectors, with the most
attractive products being core assets without risks and downgraded
rental levels.
Equity buyers, opportunistic funds, institutions and third party money
High managers with capital to deploy are the most active, though it will be
difficult to define new investment strategies until the end of Q1.
Third party managed funds and UK funds are focussing on asset
management activities. These funds are having to increase loan
payments to make up for the decrease in the value of the properties.
Strong schemes with prices adjusted in line with H2 2009
expectations (e.g. prime shopping centres / RW/ unit shops,
small/large lot sizes) are proving most attractive to investors. Values
have already fallen by 20-25% on average (maximum 40%) from
their peak in summer 2007. More value erosion is a certainty in
2009.
Investor’s sentiment is that there will be a further downturn until H2.
Liquidity in the market is low and the yield gap between North and
South assets is widening.
Contact: Elisabetta Terzariol +39 02 36010 578
 On Point • European Retail Commentaries • Q1 2009 For internal use only 11

The Netherlands Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence
Shopping Centres Ö
Retail Warehousing Parks Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
25
20 Rent levels on secondary locations are expected to remain stable or
15
10
will show a small decline.
5
0
-5 Development trends and notable openings
-10
-15
-20 Notable openings Q4 2008:
-25
Consumer Confidence
- There were no notable openings in the last quarter of 2008.
- Two small openings occurred:
Long Term Consumer Confidence Average o Geleen, Stadshart Geleen, 6,600 sq m GFA, An
extension of the prime shopping area.
Source: The European Commission
o Wolvega, Home Center, 11,000 sq m GFA, An
extension of the existing retail park
Key Economic & Consumer trends
Developers endure difficulties in raising credit from banks and as a
Economic growth has now ground to a halt and unemployment is
increasing following several years of decline. Growth in consumer result several developments have been postponed or cancelled.
spending has slowed especially in the car, furniture and catering
industries. Investment trends

After a long period of decline, consumer confidence stabilized during Q4 2008

the last quarter of 2008. Internet sales increased in 2008 by 28% to
a high level of approximately € 5 bln. This includes retail sales,
travel, and other services which can be ordered online.
Retailer Demand
Shopping Centre
Primary
Secondary
Low
Occupier trends
Retailers are suffering a lack of finance to support their business
and banks are not very willing to extend credit. An increase of 50%
in bankruptcies is expected for small and medium sized retailers in
2009 in comparison with 2008. Despite the economic crisis, total
Christmas trading result showed a small increase in turnover.
Retail Investment Volume* € 70 mio
Change Y-o-Y -29%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value.
Yields are increasing. Vendors who don’t have to sell are waiting,
RW Parks Unit Shops while vendors who have to sell are forced to ask a lower price.
Purchasers adopting a “wait and see” strategy due to increased cost
of capital and expected declining prices for real estate. Also
purchasers, both institutional and private investors, are becoming
more cautious acquiring new real estate assets and portfolios.
High
Approximately 50% of the total investment volume in Q4 consists of
unit shops. Notable is the sale of the VastNed portfolio to a private
investor. The portfolio consists of 50 shops, spread through different
cities and has a total value of € 37.1 million.
Contact: Tjard Martinus +31 205 405 405

Retailers which currently are expanding in The Netherlands:

Perfumery Mooi, Mango (Spanish), Bonita(German), Hema, Primark
(Irish), Rituals, G-Star with a flagship store in Amsterdam, Starbucks
(US) on train stations, S. Olivers (German), Repeat (Swiss), Tiger
(Danish), De Tuinen (U.K.), Subway (US), Desigual (Spanish),
Street One (German) and Apple (US).
12 On Point • European Retail Commentaries • Q1 2009 For internal use only

Poland In December 2008 Kenzo opened their stores on the High Street in
Warsaw. Caractere also opened their first shop in a Warsaw’s up-
market shopping centre Klif and TopShop opened in Złote Tarasy,
Warsaw. UK retailer Halfords also opened their first store on the
Consumer and Retail Trade Confidence Młyn retail park in Wrocław.

10 Independent research institutes estimate Christmas sales were

5 approx 13% higher in 2008 than in 2007.
0

Short-term outlook on prime rental growth

Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-5

-10

-15
Rental Growth
-20
Unit Shops Ö
-25 Shopping Centres Ö
Consumer Confidence
Long Term Consumer Confidence Average Retail Warehousing Parks Ö
Retail Trade Confidence
Long Term Retail Trade Confidence Average
Development trends and notable openings
Source: The European Commission
Notable openings Q4 2008:
- FORUM Koszalin by MultiDevelopment in Koszalin – north of
Key Economic & Consumer trends
Poland; 55,000 sq m GLA including a Tesco hypermarket, a
Castorama DIY store, a multi-screen cinema and a gallery of
Despite positive economic statistics, a slowdown is becoming
120 shops;
evident and indicators steadily worsen:
- Alfa shopping & leisure centre in Białystok – 35,000 sq m of
- Retail sales: + 6.6% Dec 2008 / Dec 2007
GLA; a delicatessen food store Bomi, a multi-screen cinema,
- Inflation rate: + 3.3% Dec 2008/ Dec 2008
150 shops;
- Unemployment rate: 9.5% in Dec 2008 vs. 8.8% in Oct 2008
- Galeria Wisła in Płock – a shopping & leisure centre with a
- Dynamics of industrial production: -4.4% Dec2008/Dec2007;
22,500 of GLA: a delicatessen Piotr i Paweł food store, a
still positive +3.5% when considering entire 2008 to 2007
cinema, a bowling + 120 shops;
Retailer Demand In total there was 161,000sqm of a new SC stock competed in Q4
2008
Shopping Centre RW Parks Unit Shops
Primary Investment trends

Secondary Q4 2008
Retail Investment Volume* €24 mio
Low High
Change Y-o-Y -81%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
Occupier trends centres, and deals over €5 million in value.

Prime shopping centres are of priority interest to retailers - tenants The only transaction in Q4 occurred in the secondary city of Kielce
are displaying a more selective approach to secondary locations. In on a small retail scheme.
general, planned retail schemes in secondary and tertiary cities are
seen as attractive at the moment. Some retailers are having
problems with obtaining bank credits for new locations and tenants Contact: Patrycja Dzikowska +48 22 318 0003
are trying to re-negotiate signed lease contracts in order to gain
better financial conditions. Anchor tenants expect higher fit-out
contributions from developers – in some cases higher 2-3 times
more than 6 months ago!

There is still a high demand from international retailers and new

brands that plan to enter Poland include: Miss Selfridge & Dorothy
Perkins (secured locations in Warsaw via Alshaya Group franchise),
Belgian kids concept Dreamland and Celio and Zara Home who
have announced they are to enter Stary Browar SC in Poznań in 2H
2009.
 On Point • European Retail Commentaries • Q1 2009 For internal use only 13

Portugal Short-term outlook on prime rental growth

Rental Growth
Unit Shops Ö
Consumer and Retail Trade Confidence Shopping Centres Þ
Retail Warehousing Parks Þ
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
0
Development trends and notable openings
-10

-20
Notable openings Q4 2008:
-30
- MarShopping in Matosinhos with 103.500 m2
-40
- Vivaci Guarda in Guarda with 13.368 m2
-50
- Vivaci Caldas in Caldas da Rainha with 14.748 m2
-60
Consumer Confidence
The developers are also very cautions, with a slowdown in
Long Term Consumer Confidence Average
Retail Trade Confidence
launching new projects. It’s expected that only part of the new offer
Long Term Retail Trade Confidence Average
will be carried out to ensure that projects do not dispute the same
catchment area and the same target audience.
Source: The European Commission

Key Economic & Consumer trends

Investment trends
At the end of 2008, economic indicators have confirmed the impact
of financial crisis in Portugal. The latest forecasts indicate that Q4 2008
confidence over the future of the economy is low and that Retail Investment Volume* €0
consumers have declining purchasing power in addition to waning
Change Y-o-Y -77%
consumer confidence.
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value.
Consumers are becoming more cautious in where they are spending
their money - recent studies have shown that people will spend The Portuguese investment market continues to suffer from lack of
more in researching multiple purchase options before they make a liquidity and the difficulty in accessing finance. Although Portuguese
transaction. In 2008, internet sales in Portugal increased by 0.6% on retail offers products with proven quality, at this moment there are
the number of users. no investors willing to buy those assets.
Throughout 2008, retail was the sector most affected by the
Retailer Demand economic crisis. The most recent assets traded were small retail
units acquired by a British fund.
Shopping Centre RW Parks Unit Shops
Contact: Alexandra Gomes +351 21 358 32 22 and Cristina
Primary
Cristovão +351 21 358 3239
Secondary

Low High

Occupier trends

As we have seen in previous quarters, retailers continue to be very

cautious regarding expansion plans. Both the national and
international operators are in a phase of withdrawal due to the
economic forecasts for 2009.

Retailers relied heavily on promotions before Christmas to aid

recovery. This is a symptom of the current economic climate
although between 1 and December 25 the total number of cash
withdrawals and purchases reached a total of 4.2 billion euros,
representing a growth of 1% over the previous year.
14 On Point • European Retail Commentaries • Q1 2009 For internal use only

Romania Short-term outlook on prime rental growth

Rental Growth
Unit Shops Þ
Consumer and Retail Trade Confidence
Shopping Centres Þ
Retail Warehousing Parks Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
Downward pressure on rental levels is expected during 2009
30
20
following the large volume of new space that has been delivered
10 and the current feeling of uncertainty on the market.
0
-10
-20
Development trends and notable openings
-30
-40
Notable openings during Q4 2008:
-50
Consumer Confidence - Suceava, shopping centre, Iulius Mall, GLA 48,000 sq m.
Long Term Consumer Confidence Average
- Bucharest, shopping centre, Liberty Centre, GLA
Retail Trade Confidence
25,000 sq m.
Long Term Retail Trade Confidence Average
- Focsani, European Retail Park, retail park.
Source: The European Commission

The openings in Q4 bring the total number of openings for 2008 to

Key Economic & Consumer trends 18, the largest number ever seen for one year, reflecting a very
active development market.
Romania registered 8% growth in the economy in 2008 compared to
the previous year. A number of retail projects have been placed on hold due to
difficulties in attracting financing in the current environment. Only the
Retailer Demand projects in advance stages of construction are likely to be delivered
within the announced timeframe.
Shopping Centre RW Parks Unit Shops
Investment trends
Primary

Secondary Q4 2008
Retail Investment Volume* €0mio
Low High Change Y-o-Y -56%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
Occupier trends centres, and deals over €5 million in value

We have seen a decrease in the demand coming from local fashion There have been no notable retail investment transactions in Q4
retailers because of lack of financing, and in general retailers are 2008 or in the first month of 2009.
becoming far more cautious before signing up to any new schemes.
International fashion retailers continue their expansion but are now Contact: Costin Blideanu +402 1 302 3414
more cautious when analysing projects and targeted cities. Until
recently, retailers were targeting cities of 100,000 inhabitants and
upwards, now they only consider cities over 150.000-200.000
people. Everybody is revaluating their expansion plans and is
negatively influenced by the fluctuating exchange rate.

In the first 11 months of 2008, retail sales grew by 14.3% year on

year (12.2% food, 16% non food). The newest data we have show
that November retail sales 2008 vs. Nov 2007 have increased by
+2.8%.

Russia
Key Economic & Consumer trends
The impact of the crisis has been less pronounced in Russia than in
the West. Nevertheless, the Russian retail market is changing. The
crisis will stimulate mergers among both retailers and developers.
Despite the crisis, food and W&B retailers did not experience
considerable decline in sales in Q4 2008. Early discounts helped to
increase the retail turnover. At the same time, turnover of luxury
declined to the level of 2006.
We expect considerable consumption correction in Q1-Q2 2009.
Slower economic growth, changing trend in personal incomes, lower
consumer confidence will depress spending.
On the supply side, more attention will shift to property management
as construction is slowing down.
Retailer Demand
Shopping Centre RW Parks Unit Shops
Primary NA
Secondary NA
Low High
Occupier trends
Russia remains attractive for foreign retailers. Despite the crisis,
new retailers continue to enter the market, although less actively.
Areas in prime shopping centres are in high demand as usual.
However, the retail demand for luxury retail projects is declining. In
2009 we expect the entrance of the following new retailers:
FamilyMart (food retailer, Japan), GAP (fashion, USA), Uniqlo
(department store, Japan), Collection Wolfgang Ley (luxury fashion,
Germany). Large foreign retailers - Metro Cash & Carry, Auchan
and IKEA - display their confidence in the Russian regions and
continue to expand there and Wal-Mart is planning to expand its
operations to Russia. Their financial strength and experience during
market downturns gives them advantage over Russian retailers.
Top retailers, first of all large food retailers - X5 Retail Group,
Seventh Continent, - will be supported by the authorities.
Faced with financial problems, Russian retailers are downsizing
their chains to improve operational efficiency. The disappearance of
smaller operators and the overall consolidation will characterize the
evolution of Russian retailers.
Short-term outlook on rental growth
Rental Growth
Unit Shops Ö investors looking to take advantage of distressed sellers.
Shopping Centres Ö
Retail Warehousing Parks NA
Despite the recent economic turmoil, prime shopping centre rents
held up in Q4 2008. The rental level has been supported by the lack
of quality retail areas. At the same time, some discounts were
offered on leasing terms and initial deposits. Rents are expected to
On Point • European Retail Commentaries • Q1 2009 For internal use only 15
decline in Q1 2009, mainly in projects with weak concepts. Prime
rents in Moscow shopping centres stayed flat at $3,700-$4,900 per
sq m / year, depending on project characteristics.
Street retail is more dynamic and rents have been less predictable
since September 2008, when areas on Moscow high streets were
one of the most expensive in Europe. Since the end of 2008 street
retail has been shaken by the crisis and rents began to decline.
However, there are too few recent deals to gauge the current market
levels.
Development trends and notable openings
Notable openings in Moscow and Russian regions in Q4 2008:
- RIO Grand - (105,000 sq m GLA)
- Fantastika, Phase III in Nizhniy Novgorod (52,500 sq m GLA)
- Grand-City, Phase I in Novosibirsk (46,500 sq m GLA)
In Q1 2009 we expect the opening of Metropolis SC (80,000 GLA). It
will become a pioneer of the new generation of retail projects.
Developers with strong financial base and quality projects will be the
most successful. Currently international companies like IKEA,
Carrefour hold strong positions on the Russian market. Some large
Russian developers like Tashir (RIO shopping centres) also
continue to be active. Due to the crisis, regional projects are being
frozen and developers return to the projects in Moscow. Concept
upgrades and redevelopment of Soviet-type shopping centres and
recently constructed projects are popular in the Millionniki cities.
Investment trends
Q4 2008
Retail Investment Volume* €51 mn
Change Y-o-Y -67%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value
Some 15 shopping centres have traded in 2008 at a total capital
value of €833 million, which is 31% below the 2007 level. Although
the transaction volume in H1 2008 was up by 13% YoY, only three
transactions have been completed since August. Out of 15
transactions, 54% involved forward commitments and joint venture
partnerships, reflecting the existing undersupply of income-
producing assets in Russia. The investment market has also shown
a move away from regional cities. Foreign investors have remained
the most active, accounting for around 65% of the total investment
volume.
Investors are being restrained by the lack of financing and are
holding back on acquisitions due to market instability and on-going
price adjustments. There are now a number of distressed assets on
the market, and yields have moved out by over 250 basis points.
The retail investment market in 2009 will depend on the amount of
debt available and will be dominated by equity buyers and by
Contact: Roksolana Nechmyrya +7 495 737 8250
16 On Point • European Retail Commentaries • Q1 2009 For internal use only

economic situation and secure favourable rental conditions. This is

Spain especially the case with secondary retail warehouses and the
fashion anchors in shopping centres.

Consumer and Retail Trade Confidence Something interesting that we are seeing is the slow down in
expansion of hypermarkets which are feeling the decline on sales,
particularly for non-food items which are the more profitable part of
their business.

Short-term outlook on prime rental growth

Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Apr-07

Apr-08
Oct-06

Oct-07

Oct-08
0
-5
-10
-15
Rental Growth
-20
-25
-30
Unit Shops Þ
Þ
-35
-40 Shopping Centres
-45
Consumer Confidence
-50
Long Term Consumer Confidence Average
Retail Warehousing Parks Þ
Retail Trade Confidence
Long Term Retail Trade Confidence Average Development trends and notable openings

Source: The European Commission Notable openings Q4 2008:

- Las Terrazas de Jinamar in Gran Canaria with 90,000 sq m,
Key Economic & Consumer trends the 1st phase of a hybrid scheme that includes a factory outlet,
retail warehouses and a leisure scheme.
Unemployment continues to rise dramatically in Spain to the highest - Dolce Vita in La Coruña, 62,000 sq m, large shopping centre
levels seen in over 12 years. Consumer confidence has fallen to its anchored by Eroski, Primark, Grupo Inditex and H&M
lowest level since 2004 whilst the economy has entered recession - Almenara in Lorca (Murcia) regional centre of 67.280 sq m
after two quarters of negative growth. including Hypermarket, fashion, leisure and warehousing units.

It is expected that the recession will continue into 2009 though the Despite the tightening of credit markets and the reduction in
market should stabilize in 2010 and began its recovery in 2011. On shopping centre investment, there is a strong pipeline of projects still
a positive note, consumer price inflation was at only 1.4% for the to come for the next 2-3 years, thereafter the pipeline will reduce
year and is expected to be circa 1.4% - 1.6% in 2009. considerably.

Retailer Demand Investment trends

Shopping Centre RW Parks Unit Shops Q4 2008

Primary Retail Investment Volume* €443 mio

Secondary
Low
Occupier trends
Christmas trading was partially saved by bringing forward price
discounts usually given during the January sale period. However,
retail sales declined in all sectors, particularly household goods
which have been badly affected by the collapse of the housing
market.
The number of retailers in expansion is reducing rapidly and causing
delays to the development of new projects due to the lack of
demand and downward pressure on rents. At the same time, new
brands are entering the market such as Koodza (second brand for
Decathlon, specialising in Outlet and discounts), G-Star and Coctel
Children.
Change Y-o-Y 3%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value. This information is revised after the press
release.
High
The level of investor demand has reduced and there are principally
two types of investor active at the present time - a small number of
German funds who are seeking prime investments with low risk
profiles, and opportunistic funds who are looking to acquire from
owners seeking liquidity at realistic prices.
However there is limited movement in the investment market at
present as most investors are taking a cautions and slow approach
to see how the market evolves.
Contact: Borja Reig +34 91 789 11 00

Other retailers are continuing with a strong expansion such as H&M,

Sport Zone, Mango Men, Worten, Prenatal, Orange and McDonalds.
Larger retailers are looking to take advantage of the current
 On Point • European Retail Commentaries • Q1 2009 For internal use only 17

Sweden Short-term outlook on prime rental growth

Rental Growth
Consumer and Retail Trade Confidence Unit Shops Þ
Ö
Aug-06

Dec-06

Aug-07

Dec-07

Aug-08

Dec-08
Shopping Centres
Feb-07

Feb-08
Jun-06

Jun-07

Jun-08
Apr-06

Oct-06

Apr-07

Oct-07

Apr-08

Oct-08
40

30 Retail Warehousing Parks Ö

20

10

0
Development trends and notable openings
-10

-20 Notable openings Q4 2008:

-30 Consumer Confidence - Gallerian Box, an external shopping centre in the Retail Park
Long Term Consumer Confidence Average Kungens kurva, Stockholm, 11,000 sq m.
Retail Trade Confidence - Forum Nacka, shopping centre, extension of 20,000 sq m
Long Term Retail Trade Confidence Average (Total GLA today 42,000 sq m)
Source: The European Commission - Elin Esplanad, Skövde, shopping centre, extension of 9,000 sq
m. (Total GLA today 25,000 sq m)
Key Economic & Consumer trends
More planned schemes have been put on hold, for example the new
The global economic downturn has had an impact on Sweden and shopping centre Lorry in Northern Stockholm, which should already
GDP growth has cooled. The National Institute of Economic be under construction but has been delayed due to financial issues.
Research has in December lowered their forecast for 2009 to -0.9
%, after a growth of just 0.8 % in 2008. A recovery is forecast in Investment trends
2010 with a GDP growth of 1.9 % as the international economy
strengthens. Forecast for consumption growth, made by the Q4 2008
Swedish Retail Institute in their report from December 2008, showed Retail Investment Volume* €111 million
a decrease of -0.5% in 2009.
Change Y-o-Y -68%
*Includes shopping centres, retail warehouses, supermarkets and factory outlet
Retail sales showed a decrease of 1.1% in transaction volume in
centres, and deals over €5 million in value
December, although in current prices the sales total increased by
0.7 %. Sales are expected to decrease to 0.5% and 1.0% for 2009 Fewer retail transactions have been completed during the fourth
and 2010 respectively (The Swedish retail institute) on account of quarter - only three over 100 Million SEK compared to fourteen in
the downturn. the same quarter last year. Interest is focused on prime products as
the difficulty in accessing finance and lack of liquidity continues to
Retailer Demand restrict investment activity to smaller investments.

Shopping Centre RW Parks Unit Shops The retail investment volume for whole year 2008 totalled 6.5 billion
SEK, excluding the Steen & Ström shopping centres of
Primary approximately 8 billion SEK in Sweden. This is a significantly lower
volume than seen in 2007 of 20 billion SEK. The investment volume
Secondary
of shopping centres is considerably lower whilst the volume of retail
warehouse transactions remains at the same level as 2007.
Low High
Interest from foreign investors has decreased with cross-border
Occupier trends activity in 2008 accounting for 66% of the total retail volume
compared with 87 % in 2007. The transaction volume from foreign
The fashion group RNB Retail and Brands have performed poorly investors has decreased even more - during 2008 foreign investors
during 2008 and they are now closing stores in Copenhagen and accounted for 4.3 billion SEK compared to 2007 with 16.6 billion
Oslo. The group has approx 450 stores and operating both in and SEK. German investors have been the most active (stood for 32 %
outside of Sweden. of the total retail volume 2008) and in December the German
property fund AXA Investment Managers Deutschland GmbH
H&M recently purchased the company Fabric Scandinavian, along bought a part of the newly developed Hansa City retail park in
with the Swedish chains Weekday and Monki. Monki is planning to Kalmar for 420 MSEK.
expand within cities where H&M already exist in Sweden and plan to
open 50 stores within the next couple of years. Contact: Karolina Nystrom +46 8-453 52 03
18 On Point • European Retail Commentaries • Q1 2009 For internal use only

Turkey Short-term outlook on prime rental growth

Rental Growth

Consumer Confidence Index Unit Shops Ö

Shopping Centres Ø*
100
Retail Warehousing Parks NA
90
* please note that headline rent figures have not been revised but effective rents have
gone down
80

70 Development trends and notable openings

60
Notable openings Q4 2008:
50
- Forum Ankara in Etlik, Ankara which is the largest outlet centre
Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

in Turkey, opened in October 2008. The 80,000 sq m project is

Consumer Confidence Index
Source: Central Bank Turkey
Key Economic & Consumer trends
Global conditions have started to affect export manufacturing
industries, causing the unemployment figure to increase by 120
basis points to 10.9% as of October 2008 compared to the same
period last year. The growth projections for 2008 have been
significantly revised down from around 4% as of end H108 to slightly
over 1%. Consumer confidence has severely deteriorated during
2008 with the index decreasing from 92% as of January 2008 to
69% as of November 2008.
Retailer Demand
Shopping Centre
Primary
Secondary
Low
Occupier trends
Retailer and consumer demand have slowed in 2008, particularly in
the second half of the year due to the growing impact of the global
turmoil. However, retail turnover recorded an 8% increase y-o-y in
real terms in November 2008. Retailers are becoming more
selective in their investment decisions with big boxes, particularly in
the form of anchor stores such as Best Buy, Media Markt and Tesco
the most active expanders. Food court units are also expanding in
areas where smoking is possible.
owned by Multi Turkmall.
- Optimum Outlet is another outlet project opened in the last
quarter of the year. The investor of the project is a well known
developer Ronesans Insaat. The project is located in the centre
of the Asian side of Istanbul offering 45,800 sq m of retail
space.
- Tekira Shopping Centre jointly owned by Corio and Eroglu
Group offers 32,000 sq m retail space in Tekirdag, a
neighbouring city to the west of Istanbul.
Investment trends
Q4 2008
Retail Investment Volume* €0mio
Change Y-o-Y -96%
RW Parks Unit Shops *Includes shopping centres, retail warehouses, supermarkets and factory outlet
centres, and deals over €5 million in value
NA
The 2008 investment market was limited in Turkey. There were a
NA number of small deals completed in H1 including Tekirdag Retail
Park in Tekirdag acquired by UK-based Enstar Capital and Corio
acquired Adacentre in Adapazari. Corio also announced a
High partnership with Acteeum for the development of two shopping
centres in the secondary cities of Malatya and Mersin.
Domestic land owners and developers are not exposed to high
levels of leverage and as a result we expect a limited number of
distressed sellers. However developers may look to international
investors as a source of capital and we therefore expect a limited
number of transactions at the prime end of the market.
Contact: Idil Hamzadi +90 212 350 08 21

International retailer interest in Turkey continues due to the long

term positive prospects of the Turkish retail market, but delays in
market entry are possible.

Overall, retailer interest remains for the projects with a good

catchment and optimal tenant mix. It is also evident that retailer
demand for outlet centres is rising as they stand out as good
locations where retailers can release large volumes of their
stock/inventory.
 On Point • European Retail Commentaries • Q1 2009 For internal use only 19

UK Short-term outlook on prime rental growth

Rental Growth
Unit Shops Þ
Consumer and Retail Trade Confidence
Shopping Centres Þ
30
20
Retail Warehousing Parks Þ
10
0

Rents are still holding up on prime pitch in the best locations, though
Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08
-10
-20
-30 general sentiment is of a downward trend as voids begin to increase
-40
-50
across all formats, especially in secondary locations.
-60

Development trends and notable openings

Consumer Confidence
Long Term Consumer Confidence Average
Retail Trade Confidence Following the arrival of Westfield London in October (see details in
Long Term Retail Trade Confidence Average
Q4 200 Retail Commentary) there were no significant new shopping
centre openings or extensions during the remainder of 2008.
Source: The European Commission General sentiment in development terms remains relatively poor as
investors and developers display caution in committing to new or
Key Economic & Consumer trends proposed schemes. The pipeline for shopping centre openings in
2009 stands at around 205,000sq m – significantly lower than the
The UK economy has officially entered recession following a second 750,000+ sq m completed in 2008. Some 450,000sq m of space
consecutive period of GDP decline in Q4 2008. This came as little originally planned for 2009 has been delayed or postponed since
surprise, and to try and stimulate consumer spending retailers set June 2008 alone.
upon unprecedented levels of discounting and promotional activity
on the high street in December. This led shop price inflation to rise Investment trends
by 1.1% in January 2009, up from 0.5% the previous month (BRC
Nielsen), though non-food prices were on the whole down 2.1% Q4 2008
relative to a year ago as the majority of high street goods continue Retail Investment Volume €1bn
to get cheaper.
Change Q-o-Q -23%
Tough times undoubtedly still lie ahead with the GBP performing Change Y-o-Y -45%
weakly against both US$ and €, unemployment accelerating
sharply, and the housing market in severe depression. Total retail investment in 2008 was down 45% compared to levels
recorded in 2007, with a 23% drop in volume also seen between Q3
Retailer Demand 2008 and Q4. Amongst the dominant investors were UK Institutions
and unlisted property companies, with units on prime high street
Shopping Centre RW Parks Unit Shops locations (sub £15m) and supermarkets the most popular products.

Primary The lack of finance does however mean there are a limited number
of active buyers and pro-longed marketing periods - everyone is
Secondary chasing same type of stock which owners are equally loath to
dispose of. Typical vendors were privates and also retail funds such
Low High as AVIVA, AXA and Prudential.

Occupier trends Contact: Stephen Daniels +44 203 147 1261

Christmas trading results were better than expected, albeit down

3.3% YoY (source OC&C). Retailer margins will however have been
significantly affected as a result of the heavy discounting.

International demand remains strong with, for example, US fashion

retailer Anthropologie announcing it is to locate its first European
stores on Regents Street and Kings Road in London before the end
of the year.
Neville Moss
National Director
EMEA Research
London
+44 (0)20 3147 1187
Neville.Moss@eu.jll.com

European Retail Commentaries – Q1 2009

OnPoint reports from Jones Lang LaSalle include quarterly and annual highlights of real estate activity, performance and specialised
surveys and forecasts that uncover emerging trends.

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