Prime rents of commercial centers will continue to rise on emerging markets, King Sturge study says

“Consumer spending growth and the need for modernization will help support the retail property market in these countries. Retail rents will rise by up to 10 percent in certain key locations in cities such as Bucharest, Prague and Warsaw,” reads the report. The study predicts that prime retail rents will fall in many Western European markets while they are expected to continue rising in most emerging economies in the near future. It adds that 2009 is going to be the year of the squeeze for the retail property market, particularly for the five big economies of the UK, Germany, France, Spain and Italy.
The study pronounces retail properties “precariously placed” and finds a difference between the investment and occupier markets. King Sturge's specialists expect some retailers to fail in 2009 and occupier markets to be generally more resilient.
Occupiers are becoming increasingly demanding in their space requirements and they will drive a harder bargain with landlords and shopping center owners, according to the study.
The capital values of retail assets are also expected to fall by over 30 percent from their peak in early 2007 to a trough in 2010, but the re-pricing of retail assets will open extraordinary investment opportunities for cash-rich players, such as sovereign wealth funds, the study says.
Magda Purice