Declining and ageing populations in many parts of Europe pose a major challenge for the retail sector, PropertyEU's Retail Investment Briefing held at Expo Real in October heard.
Declining and ageing populations in many parts of Europe pose a major challenge for the retail sector, PropertyEU's Retail Investment Briefing held at Expo Real in October heard.
‘This is a slow but certain trend,’ said Herman Kok, international research director at Multi Corporation and a member of the panel. ‘It encompasses not only the ageing of the population but also cities and regions’ growth and decline which obviously impacts enormously on retail trade either way. In today’s economic downturn, where we don’t have an autonomously growing pie, those trends become more urgently visible by the day.’
However, he noted, there are two qualifiers to the demographics problem. First, Europe should be seen as a map of cities and regions rather than of countries and that also applies to demographics. Kok: ‘You can be in a growing city in a country with a declining population, for example Ukraine has a declining population but Kiev is a young, growing city. The same applies to Hungary which has a tradition of a declining population, however there is growth in Budapest’s urban agglomeration. So catchment-wise, you can be in a very good location.’
Second, he stressed, demographic decline is a long-term and relative process. ‘It is something which can reverse due to economic investment, a new international company moving in or new production setting up. We have seen cities and regions turning around in recent decades, particularly in Eastern Europe after the transformation. So with regions that are doubtful I would always look at the economic structure and the forecast. ’
Fellow panellist Thilo Wagner, director of property at Henderson Global Investors, agreed. ‘From a retail point of view the main considerations are demographics and purchasing power. Whether you’re comfortable with the tax system or the political situation is a totally different question but if you do your homework right at the asset level you are doing the right thing.’
For the videos of the key points, starting with the demographics issue, click on the following link:
