Eurozone retail sales in surprise surge
Retail sales in the Eurozone grew at their fastest pace for 12 years during November 2013 (up 1.4%), highlighting the improved confidence among consumers. After a year of near zero growth (0.1%), sales across the EU are predicted to see a moderate increase of 1.4% during 2014.
Polarisation of Europe's retail markets
Retailer demand is expected to improve in 2014, but performance remains a top priority for retailers. Portfolio 'rightsizing' will drive new store closures in some less attractive markets, while the search for growth will increase demand in prime markets. Prime high street rents have been stable in most major European cities, but grew by 9.1% over the quarter in Moscow, by 7.3% in Copenhagen and 3.8% in Düsseldorf. London's luxury quarter, Moscow, Cologne and Düsseldorf are likely to see the strongest rental growth during 2014.
Pace of improvement in U.S. retail still gradual
U.S. retail property market conditions have continued on the same, gradually-improving path. Demand for space from retailers has maintained its moderate levels, and the market's recovery is being aided by only minimal levels of new construction, a trend that will not change over the near term. Rents are now increasing nationally, however growth is still very slow, at approximately 0.6% for the full-year 2013.
2014 does look more encouraging for the U.S. market as fundamental drivers for demand are firming. Discretionary consumer spending is expected to strengthen in 2014 given increased confidence, a much-improved housing market, and a probable lack of self-induced political crises. As such, dividends should begin to flow through to retail property sector fundamentals later in the year.
Healthy retailer demand in Asia Pacific despite mixed retail sales
Across the Asia Pacific region, retailer demand remains healthy despite mixed retail sales. In Greater China, demand from mid-tier retailers and F&B operators has helped to offset slow expansion by luxury brands. Elsewhere, leasing is slow in India but demand in SEA cities (e.g., Jakarta and Manila) is buoyant as international brands continue to open stores and/or expand their footprints. Meanwhile, Australia has seen limited evidence of improving leasing activity. Rents across the region were generally flat in Q4 2013.
Published 3rd February 2014