Improvement of occupier market
The overall growth in retail spending has resulted in a further improvement of market conditions in the retail sector. Competitive chains are once again expanding, while we are also seeing new entrants to the market. At the same time, the risks in this market are not far below the surface, as multiple retailers are still in the midst of transformation processes as they attempt to adapt to tougher competition, changing consumer behaviour and ever-increasing online shopping.
As the largest cities are also the ones growing the fastest, they continue to provide a strong base for experience shopping in high streets. International retailers remain very much focused on prime locations in the 15 largest cities in the Netherlands. With regard to daily shopping, proximity remains the decisive element, while Bouwinvest is seeing local shopping centres increasingly catering to the ageing population.
At the same time, the polarisation seen in recent years is set to continue at both regional and retail segment levels. Regions with a strong demographic and economic growth outlook offer a far stronger basis than regions suffering from demographic and economic contraction. This is also visible in the investment market, where prime properties are easily traded, while investors are cautious on secondary supply.
The most significant threat for the retail investment market is related to whether the zoning regulations in the Netherlands will be as prescriptive in the future as they are now. If not, retailers will have a lot more flexibility as to where they realise their outlets, which could change market dynamics.
Technology improves shopping experience
With technological possibilities on the rise and competition between retailers fierce, technology is playing an increasingly important role in the retail market. This goes for retailers, who can use in-store technology to implement their omni-channel strategies, but also for the owners of stores and shopping centres. These owners are now increasingly using monitoring tools to follow, predict and enhance the flow of passers-by.
Fund ready for the future of retail
The Fund's strategy of focusing on Experience and Convenience has ensured that our assets are located in prime retail locations with good economic prospects. This is why the Fund has also made solid returns over the past few years in a very dynamic market. The Fund will continue to optimise its portfolio, by investing in high-quality assets and by divesting assets that do not meet our Experience or Convenience criteria to achieve our ambition of total invested capital of € 1 billion, which will give us the scale and the synergies we need to safeguard our long-term return plans. In addition, the Fund will continue its sustainability strategy aimed at reducing the environmental footprint of the shopping centres or retail assets in its portfolio.
We believe this will put the Fund in an even stronger position for the future and we will therefore continue on this path in 2019.
Amsterdam, 20 March 2019
Bouwinvest Real Estate Investors B.V.
Dick van Hal, Chief Executive Officer
Arno van Geet, Chief Financial and Risk Officer
Allard van Spaandonk, Chief Investment Officer Dutch Investments
Stephen Tross, Chief Investment Officer International Investments