[
SPEC IAL R E P ORT
]
“with its banking syndicate an extension for its €850 million corporate facility. The company says that this has created space for the further roll-out of the company’s commercial strategy. It will continue to focus on its core activity as an initiator, designer and developer of new retail and urban centres in close collaboration with investors, and as a full service company which acts for investors, retailers and towns in the area of (re) development, design, research, marketing, leasing and mall management”. Multi’s policy has been to sell its shopping centres in Portugal while in course of development or after completion and on the investors’ behalf it still manages most of the centres it has developed. Its prospective new development 43,500 m² Forum Setúbal is more than 75% pre let. Cushman and Wakefield have reported that the project has been pre-sold to the Meyer Bergman private equity fund for approximately €120 million but the start of construction has been delayed because of planning problems. Mundicenter is owned by the construction group Alves Ribeiro and it is the least exposed to debt of the development groups. It has slowed down some of its projects but the company has no problems with cash flow and should soon go ahead with the extension of OeirasParque. The same cannot be said about Chamartin which bought Amorim Imobiliária and the Dolce Vita chain at the top of the market. It nearly sold its largest centre Dolce Vita Tejo, in which ING have a large share, but the sale did not go ahead and the company depends on the goodwill of its bankers. The opening of its latest development, Dolce Vita Braga, where a number of new centres have opened recently, has been much delayed.
SOME UP, SOME DOWN Smaller developers who entered the market late and were unable to sell their developments when completed, have suffered badly. FDO,
the construction company which developed three shopping centres under the Vivaci brand name, recently went into bankruptcy. One sector which is benefiting from the crisis is the outlet sector. Through outlet centres consumers can get access to branded products at substantial discounts. In Portugal supply in scarce and the performance of Freeport outside of Lisbon following its renovation and of Vila do Conde following its rebranding as “the style outlet” has been positive. Neinver announced that footfall in Vila do Conde in February rose by 22% year on year and turnover in its 137 shops by 10%
RETAILING AND URBAN REGENERATION One of the hopes for developers and retailers over the recent years has been that the government would introduce changes in the law to make it easier to restore old areas, both in regard to individual buildings and whole districts. In many cases throughout Europe large urban rehabilitation programmes have been based on providing modern housing and introducing retail investors as a way of bringing in additional capital. The basis need in all cases has been an efficient planning process, a reasonable retail market, a possible worthwhile return for investors and laws which ensured reasonable sanctions for breaches of contract. Unfortunately the government has been too timid in its reforms. It has failed to make it legally possible or reasonably profitable to attempt such developments and large inner city areas in Portugal still languish with many building on the verge of collapse. As the economic pressure increases the government may yet see that encouraging foreign and local investment may be the easiest and most effective way to get the economy moving forward. If local businesses are given such an opportunity the resilience they have shown in the current market conditions will be the basis for a better future.
RETAIL – 2011 Retail is one of the real estate market sectors which has been most affected by the current economic and financial situation. During the last decade it was one of the most attractive sectors of the market with growing levels of supply from year to year and with quite high demand, which is proved by the number and quality of shops and centres in Portugal. Although the sector continues to be professional and of high quality it has not been immune to the current circumstances which have implications at two levels: on the one hand because the difficulty of getting bank finance has stopped new projects going ahead and even the completion of some in course of development, and at the same time because in consequence of the austerity measures, such as the cuts in holiday and Christmas bonuses and the increase in taxation, public and private consumption has fallen and retailers themselves are also pulling back. This fact is clear from a study of the retail turnover index for the last four years. It has been falling and in December 2011 it reached its lowest level, especially in relation to the sale of non-food products. The consumer confidence index has also fallen over the same period and dropped sharply last year.
INDEX OF RETAIL TURNOVER Food, drink and tobacco products retail commerce Total Non-foodstuffs products retail commerce
Source: INE
8 | Retail Trends