France’s retail property market is expected to pick up in 2014
An expected upturn in French consumer spending during the 2nd quarter of 2014 is expected to benefit parts of the retail property market, experts say.
Consumer spending in France declined slightly (-0.3%) in the 1st quarter of 2014 but is expected to rise by 0.6% during the 2nd quarter. Purchasing power is forecast to improve, while the unemployment rate remains stable and savings are decreasing.
Some retailers are waiting to see how the market will develop before opening new outlets. They also await the effect of legislation (the Pinel Law), passed in April 2014, that reforms commercial leases and urban retail planning. However, large national groups, such as Intersport, or foreign brands, such as Marks & Spencer and Primark, continue to expand. In their view, the French market offers potential. They target large shopping centers or prime retail locations in Paris and other large cities.
Retail property investment in France in 2013 amounted to €4 billion, 26% of total commercial property investment (€15 billion). In the 1st quarter of 2014, retail investment volumes fell to €514 million, about half of volumes over the same period in 2013. But retail investment is expected to increase again in line with levels seen in recent years.
The increase will be fueled by the sale of important shopping centers, such as Beaugrenelle in Paris’s 15th arrondissement (district), and continued portfolio development by real estate investors, such as the Italian company Risanamento.
Fewer new retail spaces opened in 2013 but a number of large, new shopping centers are opening in 2014. They include Qwartz at Villeneuve-la-Garenne in Paris’s northern suburbs, an 86,000 m2 center with 165 shops and restaurants. The trend towards refurbishing and/or expanding existing retail stock also continues.
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