Market
Following strong economic growth of 3.5% in 2007, there was a marked slowdown in 2008, with growth of 2.0% on an annual basis. The slowdown was due chiefly to a dip in exports in combination with stagnation in investments and consumer spending. The latter grew by only 0.3% in 2008, significantly lower than in 2007 (2.1%). The Dutch economy was also clearly affected by the global credit crisis and the cooling of the world economy; this was evident in the last quarter in particular from indicators such as falling industrial output and consumer spending. On the other hand, economic growth for 2008 as a whole was well above the average for the eurozone (0.7%), driven partly by the strong performance in 2007. Consumer confidence initially held up reasonably well, falling only marginally over the first three quarters of the year. After the credit crisis intensified in late September/early October, however, consumer confidence fell sharply, as did manufacturer sentiment. Unemployment fell further throughout virtually the entire year, averaging 3.9% (2007: 4.5%). In the first half of the year, inflation climbed on the back of rising food and energy prices, before falling again in the second half of the year. The net effect was an average inflation rate for the year of 2.2%, slightly higher than in 2007 (1.6%), but still ensuring that the Netherlands had the lowest inflation rate in the Euro area (3.3%).
The retail sector also felt the effects of the credit crunch. Sales growth was 1.8%, but the real growth was 0.5% lower than in 2007 (2.0%). The increase in food prices was a major factor in the sales growth, and the food sector accordingly performed better than the non-food sector. Demand for retail space, especially in A-locations, remained as strong as ever, with a persistent shortage of supply. This enabled rents to increase in 2008, though this trend stabilised in the second half of the year.
There was a good deal of discussion again in 2008 about the possibility of building a mega-shopping centre outside the built-up area. In particular, the Mega Mall project just outside Tilburg attracted a good deal of media attention. For the moment, this project is still at the planning stage and a good deal of research is being carried out into the potential effects on the current retail outlets within Tilburg, where Corio has a dominant position. Completion of the new Pieter Vreedeplein shopping centre in the heart of Tilburg is a good example of the successful creation of a large-scale retail area in an inner-city location. Despite an enormous planning pipeline, the annual growth in the total overall retail floor area remains a healthy development. Research has shown that only 6.4% of projects that are in the planning stage actually receive building permits, while a growing proportion of development activities are focused on redevelopment and renovation of existing retail locations. The new development company formed by Corio also concentrates on these activities.
Source: Annual Report 2008, Chapter Review of operations, page 52 (PDF, 2,1 MB)
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