• After two years of turmoil, there is growing evidence of light at the end of the tunnel for the European retail property market. However, this light could merely be an express train coming in the opposite direction.  • There is a significant divergence between investment and occupier markets. The former may be showing initial signs of recovery. The latter faces at least two more years of hardship. Ultimately, the two markets are inextricably linked, so improvement in investment markets may be derailed by occupational weakness.

• The pain in investment markets has been manifest in rapid declining transaction volumes and softening yields. Only €13bn was transacted in the pan European shopping centre market in2008, less than half the volume the previous year. As values have collapsed, prime retail yields have moved out by an average of between 150 bps and 175 bps over the last year.

 • The focus has invariably shifted to income streams. But the rentals market has fared little better, with underlying rents in many markets likely to decline by up to 10% in 2009. Nor is this likely to be the nadir – many key European markets are unlikely to return to positive rental growth until 2012.

 Please click here to download the full publication