We expect positive but modest returns for shopping centres in 2012-2013, with prime shopping centres outperforming other sectors such as offices and logistics.
The European economic outlook has strongly worsened since this summer and this will be reflected in lower consumer and retailer confidence. Retail trade, however, is still expected to see positive but limited growth in coming years and will vary considerably by country.
The continuously high demand from retailers for dominant shopping centres, combined with limited new completions, will result in modest rental growth potential for core markets and dominant centres.
After a strong decline, yields for dominant shopping centres in most European markets have come to a standstill and are expected to remain stagnant in 2012 and 2013.
For most countries there is still an attractive spread between shopping centre yields both for prime and secondary and financing costs (see figure 1). The gap between prime and secondary shopping centre yields is large for most countries and is expected to increase even further due to the worsening economy.
Within the shopping centre sector, we expect the most promising risk-adjusted returns in Belgium, Sweden, Finland and Germany.
Offline- and online-retail will be further interlinked. Social media and the use of smart phones will increasingly influence consumer shopping behaviour and retailers and landlords are currently implementing technologies to respond to changing consumer behaviour.
Source : CBRE Global Investors