The most popular targets for both retail and real estate investment are countries in the new economic region stretching from China across India and the Middle East to Africa, according to industry experts.
"With emerging markets making up more than half of the world’s population and barriers to foreign ownership dissolving, they are increasingly attractive and accessible to global retailers as well as regional and international real estate investors," said Naomi Koningen, Project Manager of Retail City 2008, organised by IIR Middle East.
Retail City, which takes place from 1-3 June 2008 at the Dubai International Exhibition Centre, brings together global retailers, investors, shopping centre developers, franchise networks, shopping centre management, architects and regional authorities to focus on all aspects of the retail development cycle.
"Partly as a consequence of the financial slowdown in much of the developed world, property investors and retailers are now much more inclined to look further afield for growth opportunities and potential partnerships," Koningen added.
According to a recent A.T. Kearney Real Estate Opportunity Index, the top 50 emerging markets spent a combined total of $1.7 trillion on construction last year.
“Developers grow within their local geography until they run out of opportunity or need to diversify their risk profile, says Robert Zielger, Vice President of A. T. Kearney and a speaker at the Retail City Conference, "To enable a sustainable business strategy, companies have to expand internationally during the good times, to be prepared for the bad.”
Another of the conference speakers points to the shift in the balance of consumer spending globally as the level of disposable income increases among the new middle classes of emerging nations. "The challenge will be to identify markets in which to generate new growth," says Dr Ira Kalish, Director of Global Economics and Consumer at Deloitte Research.
China and India are growing at such a rapid rate that they dominate the A.T. Kearney index by a vast margin with Thailand in third place. Saudi Arabia dominated the Middle East in sixth place with the United Arab Emirates coming second in the region.
A recent survey of 300 global retailers seeking to expand outside their domestic markets also showed that 40% expect emerging markets to provide their main source of growth over the next five years. The report by C.B. Richard Ellis, a real estate services firm, said India was the most sought-after emerging market. The Global Emerging Markets Survey, representing a global portfolio of retailers with 25,000 stores, also ranked Ukraine and Russia highly.
As part of this survey, retailers were asked to list their main operational considerations when entering an emerging market. Top was the quality and range of real estate opportunities. Four out of five said they would reconsider the decision to enter a market if their favoured real estate format – such as shopping centres or stand-alone high street stores – is not available. In total, 56% base their entry into an emerging market on the availability of suitable property, compared to 46% in developed markets.
New at this year’s Retail City event will be a dedicated Retailers Pavilion where retailers from emerging markets can network and exhibit to expand their brand in direct contact with mall management, retail developers, investors and operators.
The Retail City Awards will take place on June 2nd rewarding excellence in the retail industry with categories such as Emerging Market Retailer, Retailer of the Year, Corporate Social Responsibility, Architectural Designer, Franchise Operator, Mall of the Year and World’s Best Retail Destination.
For more information on Retail City 2008, please log onto www.retailcity.ae
