For the first time since 2007, all indicators are now pointing to a stabilisation in retail conditions across Ireland
According to new research from Savills Ireland, personal consumption expenditure, retail sales and VAT receipts all appear to have stabilised and are now beginning to show improvement which bodes well for a recovery in the retail sector.
Economist and director of research at Savills Ireland, Dr John McCartney, said: “The consumer sentiment index has risen by over 60 per cent in the last 12 months and is now at its highest point since June 2007. Reflecting this, the household savings ratio has halved since its peak in 2009 and, at 8.4 per cent, is currently well below the EU average. While consumers are undoubtedly still cautious, this does now appear to be contributing to stronger retail sales, with overall turnover up 1.6 per cent in the year to November.”
However, although overall market conditions are beginning to improve, Savills warns that the recovery is not uniform across all regions and store types.
Bernadine Hogan, divisional director of retail at Savills Ireland, notes that consumer electronics and footwear & fashion retailers are currently among the most active in the market. In addition, there is also demand arising from the food & beverage sector;
“We are now seeing increased demand from food and drink retailers for prime city centre space, with requirements currently outstripping the available stock”.
Savills expects prime retail rents to stabilise, and grow in some locations, during 2014. However, this trend will not extend to secondary locations where rents will continue to soften and further tenant incentives will be offered as an inducement to take space.