2016: Retail investment slowdown in the wake of a record year in 2015
The economic recovery continues in the Eurozone. Despite a slowdown at mid-year, GDP maintained a stable pace of growth in 2016 with 1.7% on average, notably thanks to investment expenditure and foreign trade that recovered during summer. Eurozone activity appears to have been neither buoyed nor punctured by recent geopolitical events. It should enjoy growth close to 1.5 % in 2017, a slight decline on 2016 due to political uncertainties at national level and some less favourable economic fundamentals (raw materials, inflation, oil prices and interest rates).
Consumer spending remained fairly firm, although its growth flagged slightly as the year wore on, falling from 1.9% year-on-year in Q1 to 1.6% in Q3.
Retail sales in the Eurozone increased by 1.7% in 2016 and will stand at 1.3% in 2017. In the UK, it may increase by 4% mainly due to the depreciation of the sterling, following the Brexit vote. The growth forecast for France (1.3%) and Germany (1.0%) is supported by growing household incomes and low debt. Dynamism in Eastern Europe is also expected for: Poland (+5.5%), Czech Republic (+2.7%), Romania (+3.6%) and Hungary (+5.6%). Retail sales in Spain increased since 2014 and should expand by +2.4% in 2017 despite a high unemployment rate level.
E-commerce sales in Europe have been growing steadily over the last couple of years with an annual growth of 13%. In 2017, double digit-growth is still expected.
After a record year in 2015, commercial real estate investment remained high in 2016 with €230 bn. Retail, the second largest investment sector after offices took 25% of total investment with €57 bn. It stands at the same levels as in 2007 despite a drop of nearly 20% compared to 2015.
More than 70% of retail investment volume came from Western Europe and concentrated in Germany, the UK and France. With €13 bn in 2016, despite a slump of 30% compared to 2015, Germany remains the main magnet in Europe, followed closely by the UK. With €10 bn, retail investment in the Nordics is stable; thanks to better activity in Sweden and Finland unlike Denmark (-19%) and Norway (-43%). In 2016, some big shopping centres deals underpinned retail investment in small European markets such as Ireland, with the transaction of Blanchardstown Centre (€950 m).
