2019-11-13_DTZ戴德梁行_Third_Quarter_2019_ITALY_Retail_Market_Snapshot_1页_292kb

Market Summary: Prime Retail Rents and Yields – September 2019

Core Content

The document provides an overview of the Italian retail market in September 2019, focusing on prime rents, prime yields, supply, and demand trends. It also highlights the investment focus and market outlook for both high street and out-of-town retail sectors.

Main Points

Prime Rents

• High Street: Prime rents are stable, with slight upward adjustments in selected high street areas.

• Shops: Rents for high street shops show varying growth rates across cities:

  • Milan: €13,700 per sq.m (US$1437 per sq.ft), with a 1YR growth of 1.5% and 5YR CAGR of 10.0%.
  • Rome: €12,500 per sq.m (US$1311 per sq.ft), with a 1YR growth of 8.7% and 5YR CAGR of 9.3%.
  • Venice: €7,200 per sq.m (US$755 per sq.ft), with no growth data available.
  • Florence: €6,300 per sq.m (US$661 per sq.ft), with a 1YR growth of 8.6%.
  • Turin: €2,200 per sq.m (US$231 per sq.ft), with a 1YR growth of 10.0% and 5YR CAGR of 5.3%.

• Out-of-Town Retail: Rents for retail parks are stable, with Country prime at €180 per sq.m (US$18.9 per sq.ft), showing 1YR growth of 0.0% and 5YR CAGR of -2.1%.

• Shopping Centres: Rents for shopping centres are also stable, with Country prime at €900 per sq.m (US$94.4 per sq.ft), showing 1YR growth of 0.0% and 5YR CAGR of 1.1%.

Prime Yields

• High Street Shops: Yields are stable, with Country prime at 2.75% (current and last quarter), and a 10-year range from 2.75% to 4.75%.

• Venice shows a higher yield at 3.75%, with a 10-year range of 3.75% to 5.25%.

• Florence has a yield of 3.50%, with a 10-year range of 3.50% to 5.25%.

• Turin shows a yield of 4.00%, with a 10-year range of 4.00% to 5.50%.

• Out-of-Town Retail (Retail Parks): Yields are stable, with Country prime at 6.25%, and a 10-year range of 5.50% to 7.75%.

• Shopping Centres: Yields are stable, with Country prime at 5.25%, and a 10-year range of 4.75% to 6.50%.

Yield Calculation Method

• Yields are calculated on a net basis using the formula: Net Yield = NOI / PP.
• NOI (Net Operating Income) is after deducting all non-recoverable expenditure.
• PP (Purchasing Price) excludes transfer costs, tax, and legal fees.
• The yield data is guideline only, indicating trends rather than comparables for specific properties or transactions.

Market Trends and Outlook

Supply

• High street availability is limited in top locations.
• New development activity is slowing, especially in the out-of-town market.

Demand

• Retailers are focused on best locations, particularly in primary and tourist cities.
• Strong demand exists for high street investment opportunities.
• Selective interest is shown for performing out-of-town schemes, especially those involving F&B and leisure activities.

Investment Focus

• Q3 2019 saw strong retail volumes, with out-of-town schemes dominating.
• Outlet Centres played a significant role in driving investment.
• International and institutional investors are the main players in the out-of-town market.
• Private investments are more prominent in the high street.

Market Outlook

• High street investment demand is expected to remain high.
• The gap between prime and secondary products has widened in the out-of-town sector.
• The time frame to match supply and demand has increased, especially for secondary products.
• Value-add and opportunistic investors are monitoring secondary products.
• Vendors are not willing to accept repricing, indicating market rigidity.

Summary

The Italian retail market in September 2019 shows stability in both prime rents and prime yields, with slight increases in some high street areas. Out-of-town retail continues to be a key investment area, driven by F&B and leisure sectors. However, supply remains limited, and demand is concentrated in prime locations. The market outlook suggests continued interest in high street investments and a widening gap between prime and secondary products in the out-of-town market.