Out of town property in Italy and Spain set for strong growth

19 February 2008 / by Joy Tibbs
Property in the European out-of-town (OOT) sector still offers promising investment potential despite recent turmoil in the global financial markets, according to a new report from Verdict Research and estate agent Savills.

The report shows that Mediterranean countries such as Spain and Italy are likely to offer the fastest growth. "Both markets are currently in a catch-up phase and especially attractive to retailers and developers,” says senior analyst at Verdict Research and author of the report, Daniel Lucht.

The OOT Italy properties sector is expected to show the fastest growth, with space likely to increase by 46 per cent between 2007 and 2012, while Spanish property will follow with anticipated growth of 25 per cent. However, growth in Spain has recently shown early signs of a slowdown, with some doubts over the future stability of its property market beginning to surface.

Growth in northern areas of Europe is expected to be steady yet slower, according to the study. OOT sales for France, Germany, the Netherlands and the UK will be impacted by the lack of space for property development and by a greater focus on city centre development. Mr Lucht predicts that future demand will mainly involve retailers that are currently under represented in OOT areas.

Verdict predicts that the rise in OOT expenditure across the six core markets over next five years will be 17.4 per cent compared with 19.1 per cent between 2002 and 2007 and that growth will mainly come from Southern Europe. "In the South, the prime OOT locations get snapped up, while in northern Europe retailers and developers will increasingly need to focus on redeveloping older sites and make existing space work harder," says the report.

Although it says that OOT development has represented "a relatively easy route to riches for both retailers and developers" in recent years, the report suggests that a rise in the number of superstores has prompted a decline in growth.

“Over the last few years we have seen a boom in retailer and consumer interest in retail warehousing across mainland Europe. We believe that there will continue to be strong opportunities for developers and investors in this sector, particularly in Spain and Italy,” says Lydia Brissy of Savills’ European research team.

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