EUROPEAN PRIME SHOPPING CENTRE RENTS STABLE AS DEVELOPMENT PIPELINE SLOWS 2011-2013

The forecast is based on Savills study of seven European retail markets including Germany, Greece, Italy, Poland, Spain, Turkey and the UK. The Long Term Average (LTA=10 years) annual development completions per year for the seven countries is in the region of 475,000sqm/year and we expect this to drop to approximately 355,000sqm/year between 2011-2013. Broken down by country the highest drop in 2011-2013 average annual supply compared with the LTA is in the UK, at -88%, followed by Spain (-37%), Greece (-27%), Germany (-21%), Italy (-17%) and Poland (-10%). In Turkey the pace of development completions is expected to stay in line with the ten year average and Savills sees potential upward movement in prime shopping centre rents in Istanbul over the next two years.

Eri Mitsostergiou, director in Savills European Research, says: “A slowing rate of shopping centre development completions in Europe will help avoid oversupply in the markets and keep rents stable and vacancy rates down in the prime shopping centres.”

In terms of the rate of completions as a percentage of stock, Savills expects new shopping centres to account for approximately 4% of total stock on average over the next two years across these seven markets, down from 9.2% over the past six years.