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  • MAIN STREETS ACROSS THE WORLD

    2007 MAIN STREETS

    CUSHMAN & WAKEF IELD RESEARCH

    Main streets World.indd 1 5/11/07 13:29:02

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    INTRODUCTION

    Cushman & Wakefield is committed to providing an excel- lent service to their retail clients through the continuous monitoring of retail trends and practices. This edition of Main Streets Across The World provides a detailed analysis of retail property rental performance across the globe in the twelve months to June 2007.

    The information and data provided in this report are based on a comprehensive survey of Cushman & Wakefield's international offices and the editors are extremely grateful to them for their time, effort and assistance.

    Our international representation is designed to facilitate the rapid flow of information across borders and is supported by a comprehensive database of market information and regular liaison meetings. This allows for the exchange of local market knowledge and expertise and for the co-ordi- nation of strategy for international investment and location- al decision-making.

    Information on the markets has been provided by Cushman & Wakefield, its alliance partners and its associate offices listed in the table below:

    AUSTRIA Inter-pool/FaciCon

    BULGARIA Forton International

    DENMARK RED - Property Advisers

    ISRAEL Inter Israel Real Estate Agency

    IRELAND Lisney

    LEBANON Michael Dunn & Co

    MALAYSIA YY Property Solutions

    NEW ZEALAND Bayleys

    NORWAY Mork & Partners

    PHILIPPINES Cuervo Far East Inc.

    SOUTH AFRICA Pace Property Group (pty) Ltd

    SWITZERLAND SPG Intercity

    TAIWAN REPro International

    THAILAND Nexus Property Consultants Ltd

    TURKEY P&D Real Estate Consultants

    CONTENTS

    Global Overview 2

    Country Summaries Argentina 7 Australia 7 Austria 7 Belgium 7 Brazil 7 Bulgaria 7 Canada 7 China 7 Czech Republic 7 Denmark 7 Finland 7 France 7

    Most Expensive Retail Locations 8

    Country Summaries Continued Germany 10 Greece 10 Hong Kong 10 Hungary 10 India 10 Ireland 10 Israel 10 Italy 10 Japan 10 Lebanon 10 Malaysia 10 Mexico 10 The Netherlands 11 New Zealand 11 Norway 11 Philippines 11 Poland 11 Portugal 11 Romania 11 Russia 11 Singapore 11 Slovakia 11 South Africa 11 South Korea 11 Spain 12 Sweden 12 Switzerland 12 Taiwan 12 Thailand 12 Turkey 12 United Kingdom 12 United States of America 12

    Retail Rents 13

    Research Services 16

    CUS MSATW 2007.qxp:Layout 1 6/11/07 16:15 Page 1

  • M A I N S T R E E T S A C R O S S T H E W O R L D 2 0 0 7

    THE ECONOMIC ENVIRONMENT

    Moving towards 2008, the next few months still hold a good deal of uncertainty for the global economy, with many investors bracing themselves for an anticipated slow- down, although there remain some chinks of light at the end of the tunnel. One of the chief concerns remains just how much the recent problems in the financial markets will impact on the wider economy, notably in respect of how the credit squeeze will affect business and consumer activ- ity. Recent forecasts suggest that global growth will fall below 5% in 2008 and expectations for all the world's major economies have been downgraded. That said, with the Federal Reserve cutting its main interest rate in order to stabilise the US economy, other central banks may fol- low suit more quickly, which should help ease some of the pressure.

    Discussion in the US is now focussed on whether the econ- omy will suffer a hard landing or a controlled recovery in 2008. Troubles in the housing market continued over recent months, with falling sales and construction activity. However, the consumer remained relatively resilient in the face of this and third quarter trading figures were stronger than anticipated. Going forward, the picture may be less upbeat for retailers if consumers react to current uncer- tainty by cutting back on discretionary spending as some fear. All eyes will in fact be on the employment numbers and to date, forecasters have remained optimistic that after a slow start to the year, consumer spending will pick up as the year progresses as interest rate cuts impact.

    Economic data for the Eurozone suggests a robust level of growth in recent months, pointing to the area's ability to withstand the effects of a stronger Euro in addition to any serious fallout from the global credit crunch. As a result, general business and consumer confidence remains at a rel- atively high level. Inflationary risks remain however and, whilst there is some talk of a possible interest rate reduc- tion, the ECB is not expected to compromise on inflation with a cut in the short term. In the UK meanwhile, the Chancellor announced lower economic growth forecasts in the wake of the financial turbulence. A slower housing market is also now in evidence, with higher interest rates and tighter lending criteria imposed by the banks now com- bining to reduce the annual rate of house price growth.

    In Asia, economic growth in 2007 has been very robust and, whilst this is expected to ease in the short term, the general outlook is nevertheless positive. The strong eco- nomic fundamentals in the region should insulate it well against the wider impact of any global slowdown, albeit that a significant slowdown would impact on export growth. Tourism is playing an increasing role which is benefiting the retail sector and, with China's continuing commitment to the WTO and the approach of the 2008 Beijing Olympic Games, an enormous market is opening up for foreign retailers.

    PROPERTY OVERVIEW

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    AMERICAS: RENTAL GROWTH OVER FIVE YEARS (P.A)

    AMERICAS: STRONGEST GROWTH

    City Location US$/sq.ft/yr €/sq.m/yr

    New York 5th Avenue 1,500 11,983

    New York Madison Avenue 1,200 9,586

    New York East 57th Street 900 7,190

    Los Angeles Rodeo Drive (Beverly Hills) 600 4,793

    Chicago North Michigan Avenue 425 3,395

    San Francisco Union Square 400 3,195

    San Francisco Post Street 350 2,796

    Chicago East Oak Street 350 2,796

    São Paulo Iguatemi Shopping 200 1,596

    Vancouver Robson Street 198 1,584

    TOP TEN LOCATIONS IN THE AMERICAS

    CUS MSATW 2007.qxp:Layout 1 6/11/07 16:15 Page 2

  • RETAIL PROPERTY MARKET PERFORMANCE

    The Americas

    Rental growth in the Americas amounted to 20.3% over the year to June - with all the countries covered showing increases. Argentina recorded the strongest growth in the region, with a rise of 22.7% on the back of buoyant occu- pier demand in the face of tight supply in the main areas of Buenos Aires and smaller cities such as Córdoba, Mendoza and Rosario. In Brazil, retail market sentiment has remained firm, with annual rental growth amounting to a very healthy 22.2%. Economic stability, combined with lower unemployment, rising disposable incomes and a reduction in interest rates has led to an increase in retail sales. Another key trend has been the gradual shift in per- ceptions of shopping merely as necessity towards more of a popular leisure activity. As a result, the retail market has continued its steady expansion. Spurred on by tax reforms to encourage foreign investment, there has been a notable increase in interest from international retailers. In Mexico, little changed over the year in terms of sentiment and rents saw a moderate growth of 4%, with retailers still cautious- ly optimistic about the medium term.

    In Canada, rents saw growth of 5% in an environment of rising disposable incomes and strong retail sales growth which has led to low vacancy rates in many areas. Luxury fashion brands have been particularly active as they contin- ue their move into downtown shopping districts, driving rents up. Most of the country has been benefiting from strong economic growth, high levels of consumer confi- dence and a booming residential development market.

    Whilst rising interest rates over the course of the past 12 months have somewhat dampened retail activity, the US has still enjoyed strong rental growth of 20.1%. Recently, the US Federal Reserve cut interest rate for the first time in four years which should ease some of the pressures on consumers as the economy moves into a period of slower growth. However, throughout 2006 to mid-2007, demand for retail space has been strong on the back of buoyant consumer spending. As a result, large cities recorded solid rental growth over the year to June, although Chicago was clearly the strongest performer. The most expensive loca- tion again was New York, with rents on 5th Avenue stand- ing at US$1,500/sq.ft/year.

    Europe

    Whilst the recent turbulence in global financial markets and higher inter

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