Central London remains the retail market leader in Europe, driven by Brits and tourists spending more in the UK’s capital city, more store openings than in any other market, and double digit rental growth, according to a new report from global real estate advisors, Colliers International.
“2016 was the third year of consecutive growth in consumer and retail spending in Europe, driven by low inflation, an increase in employment levels and wages due to people having higher disposable income. Looking at London specifically, significant increases in occupational costs in 2017, as a result of the rating revaluation and an anticipated rise in inflation, are likely to curb any further rental growth over the coming year. Retailers are still focusing on cost reduction, turnover is still under pressure and it is expected that short-term and more flexible agreements (for example leases based on turnover rent) will become more popular,” explains Paul Souber, Colliers’ Co-Head of EMEA Retail.
“Nevertheless, with considerable demand for space from both domestic and international brands and high overseas visitor spending due to currency depreciation, the outlook for retailers in the UK’s capital remains positive. In addition, UK-based brands selling abroad should benefit from overseas sales, especially through their e-retailing platforms. In addition, high occupancy costs did not discourage luxury retailers from expanding as numerous new opening and re-launches of refurbishes stores also took place in the capital city.”
Etienne Van Unen, Co-Head of EMEA Retail at Colliers continued: “On the other side of Europe, continued political uncertainty, especially around elections in the Netherlands, France and Germany, might well dent consumer and business confidence across this region. Additionally, the impact of e-retailing continues to take its toll on markets, and other countries may follow the evolution of the Dutch market. The Netherlands continues to grapple with structural vacancy across regional markets. Further rental declines are expected, despite strong demand growth for the key destination city of Amsterdam, which bucks the national trend.”
Other key findings from Colliers’ EMEA Retail Snapshot inlcude: EU retail spending is forecast to increase by 2.2 per cent year-on-year in 2017; the highest growth was recoded in Luxembourg (14 per cent), Romania (13.3 per cent), Lithuania (6.7 per cent), Poland (6.4 per cent) and the UK (5.5 per cent). Outside the EU, Serbia (7.1 per cent) and Turkey saw sold growth (4.4 per cent), which Russia recorded a further decline (-4.6 per cent); retail spending growth in Dublin was one of the highest among European cities. The decline in international visitors to Paris had a negative impact on both tourism and retail, but demand improvements in Q4 2016 point to a more favourable outlook for 2017. The increasing number of tourists from China and the Middle East, which are the biggest international spenders, bodes well for France’s capital city, and it remains one of the top luxury locations in the world.