ING Real Estate forecasts positive rental growth for retail property across Europe over the next two years, with particularly robust northern European markets bolstered by strong economies and rising consumer confidence. ING Real Estate's research indicates that with Europe at the beginning of rental recovery and with some markets poised to see sustained rental increases, property investors should consider added-value and opportunistic strategies to capitalise on the strong growth that is expected.
"Consumer confidence is rising in most European countries, though still under trend, on the back of stronger economic growth as well as employment and income growth. As a result, retail sales growth is expected to accelerate from 2006 onwards after a slowdown during the last two years. The improving drivers are expected to stimulate retail rents in all markets except the UK outside London," said Maarten van der Spek, Managing Director of Research and Strategy Continental Europe with ING Real Estate Investment Management.
Private consumption has been strong across all the Nordic countries in 2006 and far above the euro-zone average. Some levelling is expected next year, but the growth forecasts remain robust on average. In addition, consumer confidence in the Nordic region is the highest in Europe.
Ranking of cities with rental growth above the European average
1. Oslo
2. Copenhagen
3. Stockholm
4. London
5. Prague
6. Budapest
7. Helsinki
8. Amsterdam
"Europe's retail cycle is clearly on the upswing. We believe investors will continue to see strong returns in retail in the near future, as rental growth is expected, and although yields are at historically low levels, they are likely to compress further," Van der Spek concluded.

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Wieger Sietsma, +31 70 341 8474, wieger.sietsma@ingrealestate.com