Due to ongoing growth in online shopping and continuing economic uncertainty, the retail market has become fiercely competitive and this is likely to continue for the foreseeable future. Although a further modest increase in GDP growth is forecast for this year, consumer confidence is still low and the Dutch government's ongoing austerity measures and changes to pensions are likely to have a negative impact on consumer spending power.
Polarisation set to continue
One of the main effects of this ‘new reality’ has been the widening value gap between primary and secondary locations. This has affected both high street retail and local shopping centres. We expect this polarisation to increase in the years ahead, as new retail development increases the oversupply on the market. This will increase the competition for prime assets in A1 locations in both segments.
We believe that prime retail locations that excel in our strategic segments of experience and convenience will be the most future-proof investments in the years ahead. The Fund will therefore continue optimise its portfolio, by investing in distinctive and high-quality high street retail units in the major shopping cities (A1 locations) and in well-positioned daily shopping centres with a clear focus on convenience.
Growth on the agenda
Our target is to increase the Fund’s capital to around € 800 million by the end of 2017. To achieve our target of 70% high street retail (experience) and 30% local shopping centres (convenience), we plan to invest some € 140 million in high street assets and € 15 million in local shopping centres over the next three years. And we have earmarked a sum of approximately € 60 million for the redevelopment of the assets in the standing portfolio. The Fund will also be looking to divest assets worth € 80 million over the next three years.
For the retail market as a whole, there are still many challenges ahead. However, the progress we made in 2014 have put the Fund in a stronger position. In 2015, we will continue to enhance this position as a number of new developments will be delivered and redevelopments will be reopened for business.
Amsterdam, the Netherlands, 16 March 2015
Bouwinvest Real Estate Investment Management B.V.
Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments