PARIS-Europe, including here and in the United Kingdom, has seensigns of prime yield stabilization in the retail sector withfurther hardening forecast, according to international real estateadvisor Savills. Paris has recorded a 75 base point inward yieldshift in shopping centers and 50 base points in retail parks.Madrid, Barcelona and Warsaw have seen a 25 base point yieldhardening for shopping centres.

The research, which looks at shopping center and retail parkperformance across 27 European Union locations, states that thisinvestment appetite is due to a renewed confidence in the sector.Whilst consumer confidence remains negative across Europe, it hasimproved significantly compared to the historic lows of March 2009.Retail trade recorded in June 2010 showed an increase of 0.5% yearon year. Furthermore, with a limited shopping centre developmentpipeline moving forward, demand and supply are set to remainbalanced in the prime segment of the market.

According to Savills' Eri Mitsostergiou, “The impact of thenegative economic sentiment is easing and retail activity isfinding its equilibrium at new levels of demand and supply. Theprime segment is broadly balanced, thus rents are stabilising inmost locations. Prime retail assets are becoming the preferredinvestor target in the larger markets, and prime yields arehardening once again.”

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