While sentiment surrounding the Eurozone at the start of MAPIC this week might be muted, retailer confidence continues to emerge.
Perhaps not quite enough to flood the Croisette with popping champagne corks, but this optimism will mean visitors will turn up to Cannes this year with a sunnier disposition.
MAPIC is a great opportunity to test retailer sentiment and as we head towards the end of the year, the team will return from this week with a more enlightened insight into retailer outlook and what their priorities look like for 2015 — including locations of choice. Despite a muted consumer backdrop across the Channel, we have already seen in the second half of this year a growing desire from retailers to be in the best retail destinations. The performance of our newly opened Les Terrasses Du Port development in Marseille is a prime example, with brands including the Kooples, Princesse tam-tam and Michael Kors, reporting that their stores in the scheme are among the best performing in their French portfolios.
While shopper confidence continues to pick up, retail success is increasingly driven by the growth in world tourism and an unrelenting global appetite for aspirational and luxury goods. This is why we continue to see substantial value in outlet centres and we have recently increased our exposure to this sector. In 2009, our investment contributed £114m to our net asset value (NAV), some 4% of the total. Fast forward to 2014 and that investment has increased fourfold, with a contribution of nearly £690m at June 2014, equating to 16% of our total NAV.
Outlet villages epitomise destination shopping and customers often travel significant distances to visit them. Average spend and sales densities can be significantly higher than in shopping centres but in return both retailers and consumers expect a superior experience. We are confident that there is a growing requirement for outlet space across Europe from retailers who recognise that they can sell surplus merchandise to a large and diverse range of consumers.
As a result, property investors are keen to gain exposure to a sector that can deliver double-digit organic growth. We are the only REIT with strategic exposure to the European outlet market and a successful centre succeeds or fails by the quality of its tenants - hence why Hammerson places such importance on MAPIC and the constructive conversations that can be had there.
News is always welcome as people board their flights to Nice, and we announced at the beginning of the week, alongside our partners in VIA Outlets, the £45m acquisition of three further outlet centres in Sweden, Portugal and the Czech Republic. The new venture, which we created in September with Value Retail, APG and Meyer Bergman, aims to take advantage of Europe’s fragmented outlet centre market while at the same time capitalising on the partners’ strong track records, access to brands and retail knowledge.
It’s always good to have a talking point and have some momentum behind you when catching up with the great and the good in the South of France, but what I’m more excited about this year is being able to offer retailers more strength and depth in terms of both the style and location of our retail destinations. No need for an umbrella this year, the outlook for retail is looking distinctly sunnier.
David Atkins is CEO of Hammerson.