Sale of retail space, demand of logistic space expected to increase in Europe, says Savills

KUALA LUMPUR (Jan 27): The sale of retail portfolios and demand for logistic space is expected to increase in Europe this year, said global property services firm Savills in a briefing note entitled “Themes for European property in 2016” released this month.

Savills noted the sale of numerous retail portfolios – including some pan-European ones – last year, and is expected the same trend to continue this year as some retailers look to cash out to invest back into their core businesses, said the firm.

However, prime dominant shopping centres in strong catchment areas in terms of population, tourism and affluence will continue to take the lead in the retail scene, said Savills.

These shopping centres will continue to draw shoppers and visitors regardless if they generate sales online and offline, Savills explained.

“These retailers are also continually looking to expose themselves to the consumers via these shopping, leisure, lifestyle and custom matched experience destinations.

“London, Paris, Munich, Madrid, Berlin are some examples of cities which are expected to show strong population growth over the next decade in the context of the fast urbanisation trend and which will remain among Europe's most affluent catchments,” it said.

The e-commerce boom is expected to drive higher demand for warehousing space and distribution networks in all large urban areas, said the firm.

Savills noted that e-commerce in Europe grew by 22% last year and is expected to grow further over the next few years.

“We expect development activity in the sector to grow next year since Internet retail needs differ from the traditional logistics channel.

“Suitable supply will come under pressure, with relatively limited knock on effect on rental values, depending on cities,” Savills said.

Savills expected the e-commerce industry to grow further in the coming years, particularly from investors in the US for this new type of logistics warehouses.