Europe’s prime retail markets remain resilient

Europe’s prime high streets showed strong resilience between first and third quarter this year, according to recent analysis by Colliers International for their biannual EMEA Retail Rents Map. The majority of markets surveyed reported stable prime rents, although almost a dozen reported some growth, with notable increases seen in Oslo and Riga with gains of7% and10%respectively. Conversely, Athens and Sofia saw sharp falls with prime high street rents down 17% and 15% in each case.
Shopping centre rents in Europe’s dominant centres also remained stable as retailers continue to demonstrate strong demand for space whilst rationalising their portfolios elsewhere. Notable increases were seen in Leeds and Milan, where shopping centre rents were pushed upwards by 8% and 11% respectively.
High street prime yields have generally remained stable or compressed mildly as investors continue to pursue risk adverse strategies, with capital preservation their greatest concern. In Amsterdam yields have dropped to 4.4%, down from 4.75% 6 months’ previously. Oslo has also seen a sharp compression and prime yields are now at 5.00%, down from 5.75%.
A similar pattern was seen in prime shopping centres, with most of the markets monitored by Colliers reporting flat yields over the six month period. Prime shopping centre yields in Moscow now stand at around 10%, down from 10.5%. Again, in Oslo yields have sharpened notably, decreasing to 5.00% from 5.75%.
“Prime retail assets have continued to attract strong investor demand,” says Ian Elliott, Head of Retail for Colliers International in Eastern Europe, “Large, dominant shopping centres are still in vogue with cash-rich investors looking for large, well-let, low-risk investments.”