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Shopping Centers Today -> June 2004
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EUROPE RIPE FOR RETAIL, ROME CONFERENCE TOLD
BY DEBRA HAZEL
ROME — Southern Europe will continue to interest shopping center investors, and certain north European markets will be drawing funds too, said speakers at ICSC’s 29th annual European Conference.
Between 1999 and 2003 Spain led Europe in shopping center investment, with €4.2 billion ($4.98 billion) invested, said Christopher Wicker, president of the Paris-based Retail Consulting Group. France came in second, with €3.3 billion, and Italy was third, with €2.9 billion, but is “galloping to the point of catching France,” he told conferees, who gathered here in April.
Investment in the European shopping center industry now totals €10.7 billion, and that is divided almost equally between the United Kingdom and continental Europe, said Andy Watson, head of investment and valuation at Retail Consulting. Investment funds came from northern Europe, the United Kingdom and the United States, he said. Italy, a major investment draw in 2003, will probably remain so this year, according to a conference panel. Scandinavia, particularly Sweden, is drawing interest too.
Yields on acquisitions last year ranged from 5.5 percent to more than 10 percent in newer markets such as Estonia. Those numbers could bring more U.S. investors into the market. Last year Simon Property Group formed a joint venture with Italian retailer Rinascente to own and build centers in Italy, and The Mills Corp., Hines and Polimeni International are active on the Continent too (see story).
“European yields look pretty good” compared with the United States, said Kathleen M. Nelson, a managing director of financial services firm TIAA-CREF, which has major investments in shopping centers.
Yet Europe remains “the laggard in the world economy,” said Norbert Walter, chief economist at Deutsche Bank, Frankfurt, Germany. Government overspending and the burdensome health benefits paid to retirees will continue to hurt the West European economies, as will lower productivity and a lack of opportunity for women in the work force. Europeans also have to work harder at integrating all aspects of their economic union, including the equity markets, to become truly competitive, he said. “We have slept for the last four years,” Walter said. “We badly need innovation. We need to encourage new enterprise.”
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