A rebound from the current extremely depressed levels is anticipated during 2010, according to Glenigan, as development finance becomes more widely available and the major supermarket trends press on with their capital expenditure programmes.
However, a more sustained recovery will be dependent upon a marked turnaround in household spending power and consumer confidence. Unfortunately retail sales growth is expected to remain sluggish over the next two years. Weak average earnings growth and high unemployment are expected to hold back household spending, whilst tax increases will further erode households’ discretionary spending.
In addition January 2010 sees the re-introduction of the 17.5% standard VAT rate which will both constrain household spending and hit retailers’ margins. Against this economic background, the anticipated recovery over the next two years will still leave the value of underlying projects down by a third on 2007 levels, while large £100 million plus shopping centre developments are expected to remain especially scarce.
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