Realty Review magazine 2013

<REVIEW Highlights of the REALTY 2013 seminar program

2013

Leap in International Investors attending Realty 2013 www.realty-brussels.com

Letâ&#x20AC;&#x2122;s talk real estate

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In this magazine 3 | REALTY 2013 Attendance Smashes Forecasts with 20% 4-8 | The Flexible City 10 | AZ Jan Portaels WINS IFMA Belgium Facility Awards 12 | Heysel Stadium Move For Neo Project at Realty 14 | Impressions of Realty 2013 16 | Growing appetite for listed property exposure 18 | Regulatorâ&#x20AC;&#x2122;s REIT Threat may not Materialise 21-24 | Unity in Diversity 26 | Facts & Figures

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introduction 3

Gregory Olszewski, Exhibition Manager, Realty 2013

REALTY 2013 Attendance at REALTY 2013 Real Estate Trade Fair Smashes Forecasts with 20% Jump to Exceed 6,000 Visitors

The rise in the number of visitors attending the fifth REALTY real estate trade fair held in Brussels on May 28 – 30 was nearly double pre-show forecasts, with 6,333 people passing through the gates of the Tour & Taxis exhibition venue.

“We were projecting a 10% rise in visitors this year, because the exhibition space was sold out weeks in advance, but this result exceeded our expectations and is a great achievement. It was also clear that the quality of the stands had improved significantly as exhibitors realised they needed to make their offerings stand out in a tough market and the networking events were very well attended.” Gregory Olszewski REALTY Exhibition Manager said.

The entire 8,000 square metres of exhibition space at REALTY was reserved in advance by 126 exhibitors. Visitors to the trade fair included around 150 international investors, attracted by signs of a pick-up in the Belgian market and the increasing breadth and depth of the associated seminar programme.

The REALTY Seminar Programme

6,333 people visited the fifth Realty real estate fair, a 20% increase over 2012!

Each of REALTY’s three days had a general theme: “The City Landscape” on the opening Tuesday, “International Investors and Regulation” on the Wednesday and finally the “Retail Market” on Thursday.

The Brussels’ Building Confederation and the Scientific and Technical Building Center (BBRI/WTCB) kicked off the REALTY seminar programme on Tuesday with its “Booming Cities, Blooming Cities” event.

This examined urban concepts for smart cities, ranging from social media and its contribution to community building, to the problems of “mega-projects,” and why temporary uses are a powerful tool for incremental change.

On the Wednesday, CBRE’s Belgium Investor Seminar proved hugely successful with about 300 people attending to hear top-level analysis of market trends and opportunities from the company’s own experts and international investors alike.

This was preceded by the PropertyEU European Real Estate Policy and Investment Forum, which is becoming a fixture on the REALTY seminar programme as the place to keep track of the latest developments in the rapidly evolving real estate regulatory landscape at the heart of the EU. The Forum also featured an overview by Brussels’ Mayor Freddy Thielemans on the city’s key NEO retail development project, the purchase of which is the subject of intense competition between three of Europe’s largest listed real estate investors.

REALTY’s seminar programme concluded on Thursday with the BLRW (Belgian Council of Shopping Centres) looking at “Unity in Diversity: How and Why Retailers Increasingly Choose a Variety of Locations.”

“Carefully targeted marketing spend is vital during a period of austerity and constrained budgets, but companies still need to differentiate themselves from the competition if they are going to survive and grow in difficult markets. After five years of consistently strong growth, REALTY has now proved itself as the place to be for any company connected to the real estate business that is serious about its marketing in Belgium,” Gregory Olszewski concluded.

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4 THE FLEXIBLE CITY

“Siemens press picture

The flexible City Booming Cities, Blooming Cities Cities need to be collaborative living organisms that interact with their inhabitants in a constantly evolving and flexible way, experts in the urban landscape told the Booming Cities, Blooming Cities seminar organized by The Brussels’ Building Confederation and the Scientific and Technical Building Center (BBRI/WTCB).

Technological advances in social media and energy distribution networks now allow citizens to engage far more readily with the city environment and adopt more sustainable lifestyles in a way that local politicians ignore at their peril.

The days of the “budget-busting” rigid urban master plan imposed on people without real consultation are numbered as suspicious citizens increasingly push back against an outdated and elitist process.

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“This is the Third Industrial Revolution and a bottom-up approach. It’s about getting citizens’ collaboration and agreement at the start. But you have to keep a close eye on the political cycle and see when politicians want votes. You need to keep your political leaders onside, so if your plans are not economically viable as well, then forget it,” said Frans-Anton Vermast, Strategy Advisor for Low Carbon Urban Policies for the city of Amsterdam.

Amsterdam - Smart City Until a few years ago Amsterdam’s planners were heavily focused on the physical environment -- the roads and buildings of the traditional city map, -- but this has now changed and communication connectivity and the energy grid are considered to be just as important.

Amsterdam has also moved to get its inhabitants more deeply involved in the decision-making process,

Vermast said. The city abandoned an original plan to use consultants to provide a vision of what the city might look like in 2040 and conducted interviews with 8,000 of its citizens to survey their views instead.

One interesting input from the exercise, was that the city’s homeless -- one disenfranchised group that usually doesn’t get consulted,-- said they wanted publicly available power points on the street so that they could charge their mobile phones and get connected to other people and the online world.

A cornerstone of Amsterdam’s evolution as a “Smart City” is the creation of a “Smart Grid” as its energy backbone. This is envisaged as a virtual power plant where people can deliver electricity to the grid from wind or solar panel sources, for example, as well as just take energy from it.

INTERVIEW 5

Frans-Anton Vermast, Strategy Advisor for Low Carbon Urban Policies for the city of Amsterdam.

“ You need to keep your political leaders onside”

Jean-Christophe Vanderhaegen, Director General of the Brussels Construction Confederation

Frans-Anton Vermast, Strategy Advisor for Low Carbon Urban Policies for the city of Amsterdam.

At ground level a living laboratory has been created with the city’s first “Climate Street” in the trendy central Utrechtsestraat. Around 140 shops and other small businesses in the area are collaborating on collective and individual energy saving measures such as smart meters and energy feedback displays, dimming unneeded shop window and public lighting, and sustainable waste collection and street furniture.

The Smart City is a Milepost on the way to Building the Wikicity

The city council is also playing its part by encouraging municipal employees to adopt smart flexible working practices, such as telework from home or using Smart Work Centres -- which themselves present opportunities for creative collaboration. Amsterdam plans to reduce the number of traditional office buildings it uses from 200 to 120 and cut its desk-to-employee ratio in half.

“Many people still associate smart cities with environmental sustainability and carbon footprint reduction, but the main challenges going forward are financial sustainability and the ability to deal with an increasingly turbulent and uncertain future ... that’s why we need to move on to ‘Smart City Plus’ – the Wikicity, which is a perpetually interconnected city at all levels of society,” Vanderhaegen said.

Jean-Christophe Vanderhaegen, Director General of the Brussels Construction Confederation said Belgium and Europe’s capital needs to do far more to become first a “Smart City” on the way to evolving to what he termed a “Wikicity.”

He added that Brussels is “not so smart a city” and is struggling to

reach a high level of interconnected sophistication due to a lack of strategic vision, bureaucratic red tape and constrained budgets.

Brussels is the third richest region in Europe, but is a small territory of 161 square kilometres with no centralized jurisdiction over the metropolitan region. By 2020 the city will have 180,000 new inhabitants, however, it currently has 110,000 jobless people (66,000 of whom are long-term unemployed for more than a year and 27,000 on social benefits) with 30% of its population considered to be poor.

Brussels has 85,000 businesses, but these only create 30,000 new jobs a year.

Vanderhaegen said these challenges should be viewed as chances to be seized as the arrival of large numbers of new residents in the city can create great opportunities for innovation and progress in social and cultural development.

6 THE FLEXIBLE CITY

Dr. Norbert Pralle, Head of Innovation Management at German construction company Züblin,

A Wikicity enables citizens to know what is going on around town and to contribute their ideas on how they are governed, so there is better social cohesion, good governance, and shared social norms. It enables innovation and new modes of wealth creation because it promotes entrepreneurship. As cities get richer they generate new jobs and reduce poverty so growth becomes more inclusive. A Wikicity is also more likely to attract and retain talent, Vanderhaegen concluded.

One would have thought, therefore, that the reconstruction of Stuttgart’s 86-year old main railway station, to take it underground and integrate it to Europe’s high-speed rail network, while releasing space for a new urban quarter and parkland, would be welcomed with open arms by the city’s citizenry. Not so, Dr. Norbert Pralle, Head of Innovation Management at German construction company Züblin, which is headquartered in Stuttgart, told the seminar.

Stuttgart’s Railway Hub A Lesson Learned for Megaprojects

“The public increasingly doesn’t trust the promoters and politicians involved in these huge urban projects and there were large protests against the railway station development,” he said.

The world’s increasing urbanization and the rise of mega cities, with 60 percent of the global population expected to live in urban areas by 2030, is putting a huge strain on congested transport networks and the built-up environment as a whole.

Surging car volumes means that in some European cities traffic is hardly moving any faster than it did 50 years ago.

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Pralle said that people tend to focus on the drawbacks of these schemes, which typically take much longer than planned and have significant cost overruns. They are also often perceived as causing inconvenience with the risks unevenly shared between the various stakeholders.

The estimated costs of the Stuttgart train station project have varied widely between different sources and over time – from €2.46 billion for the feasibility study in 1995 to €€4.7 billion (plus a €1.93 billion risk buffer) in a report to the Supervisory Board of German Railways last year.

“You have a huge project and nobody can put a price tag on it,” Pralle said.

He added that planning approval systems and development permit and cost-assessment processes for megaprojects are failing to keep pace with the complexity of the smart cities needed for the future.

A more holistic approach to megaprojects is needed. In the case of Stuttgart, for example, such an approach would take into account the different onward journey options available to the individual, from bicycles to electric cars, all linked together with real-time information on the Internet. “Travel never stopped at the train station,” he said.

“Developing new ways of getting community “buy-in” to these projects is also critically important”, Pralle concluded.

INTERVIEW 7

Peter Bishop, Professor of UK based urban practitioners Allies and Morrison, former Director of Development for London

Leave Space for the Temporary City One solution to the problems created by the rigidity of traditional urban planning may be to accommodate flexibility from the start and allow temporary uses of space to evolve and perhaps become a long- term outcome for a location.

“Why have ‘urbanists’ been so focused on permanence?

Temporary initiatives are good for utilizing buildings and stimulating development. Low-tech development for urban centres moves away from rigid master plans and tries to use the change process in a dynamic way,” according to Professor Peter Bishop of UK-based urban practitioners Allies and Morrison and a former Director of Development for London.

Bishop said a tolerance for temporary solutions allows for rapid change in economic circumstances, such as the “revolution at work,” where people can now carry their office around in a bag, which is changing the very concept of location.

8 THE FLEXIBLE CITY

At the Kings Cross urban regeneration district in central London, the developer Argent deliberately left unfilled spaces in its plans to allow temporary uses and to draw people into the project from an early stage to establish “a new sense of place.”

These included a garden created from refuse skips and temporary performance space for the Sadler’s Wells Theatre dance company.

Temporary events can be powerful catalysts for the development of an area, with the London Olympics probably the most famous recent example as it has converted a derelict and deprived area in the east of the city into a new location for sports facilities, housing, retail, and parks.

The local community itself may spearhead initiatives, like the citizens of Toronto did when the failure of the city council to create bike lanes led them to paint their own on the roads.

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Cities need to have “zones of tolerance” where the official authorities “don’t try too hard” and local people are left to come up with their own creative solutions, provided they’re legal, such as gardens and workshops.

Major consumer brands have quickly cottoned on to the youthful, alternative, creative and quirky, associations of the temporary space and hitched these to their own marketing campaigns. Nike has, for example, used pop-up stores in New York linked to online short-term price discounting for its trainers to attract people to these temporary retail outlets.

“Temporary activity can be an intentional phase in a project that maybe doesn’t even get completed.

It allows you to start commercial activity and job creation and to get stuck-in at an early stage. Temporary uses can completely change the way you’re going. It’s like curating a sophisticated dance through the city, bits of theatre with lots of moving parts and trapdoors,” Bishop concluded.

INFO 9

10 FACILITY AWARDS

AZ Jan Portaels wins IFMA The first day of REALTY ended with the AZ Jan Portaels hospital in Vilvoorde, north of Brussels, winning the ‘Facility Management Project of the Year’ at IFMA’s Belgium Facility Awards 2013.

The hospital achieved a 25% savings in inventory costs and significantly reduced time pressure on medical staff by transferring operating theatres’ logistics to its facilities department.

“AZ Jan Portaels’ project showed how significant added value can be created for an organisation by focusing on logistics, winning employee trust and building on strong input from its own facilities department. The project scored highly in all criteria and was a clear winner for the jury,” Gert Potoms, Assistant Director General of the Agentschap voor Facilitair Management, the Flemish government’s facility management agency and chairman of the awards jury said.

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Personnel costs make up some 40% of a typical hospital’s expenses. With medical institutions under pressure to act more like businesses, and facing profit margins that rarely exceed 2%, cost management is particularly critical.

The hospital’s solution was a project, codenamed Helena, whereby internal tasks were re-organised and concentrated according to specialism, with the facilities department taking over responsibility for all aspects of logistics.

Internal research at AZ Jan Portaels showed that nursing professionals in its surgical departments were spending up to 35% of their time on logistical tasks such as the ordering of supplies. Nurses are more expensive than facilities personnel and their priorities lie with caring for patients, meaning that the logistics work was being pushed back to lessbusy periods, resulting in extra work pressure on the nursing personnel, and supply levels that were often not matched to needs.

Recognising that implementing change in a surgical environment requires more than simply laying out facts, the project team set out to convince all parties involved (general management, surgeons, nurses and trade unions,...) of the aims and needs of the re-organisation. A structure was then put in place whereby care and logistics professionals were put on equal footings. After a period of close support for all personnel involved, tasks were re-allocated according to specialism, whereby all logistics functions came under the same management.

The new structure has allowed nursing personnel to concentrate on their core responsibilities of care,

INTERVIEW 11

Gert Potoms, Assistant Director General of the Agentschap voor Facilitair Management

Belgium Facility Awards resulting in a better throughput of patients in the operating theatres.

Shorter changeovers have meant that surgeons are doing more operations with the same amount of time.

Operating theatre inventories are now subject to regular evaluation and the cost of supplies has fallen by 25%. â&#x20AC;&#x153;This project shows that with the right approach and the right people, radical changes are possible in complex organisations. Project Helena was implemented even while the operating theatres continued to work normally,â&#x20AC;?

Gert Potoms concluded: Other prize winners at the IFMA Belgium Facility Awards 2013 were AW Europe, whose project for the optimisation of the logistics processes in a newly built distribution centre came in second, and Eneco which won third prize for the design of employee working environments in a new office facility.

12 Neo Project at REALTY

Brussels’ Mayor Announces Heysel Stadium Move For Neo The Neo mixed-use development project in Brussels will receive a major boost from plans, first publicly announced at REALTY, to move the Heysel football stadium to another site, according to the city’s mayor Freddy Thielemans.

Speaking at the European Real Estate Policy and Investment Forum hosted

by PropertyEU magazine, Thielemans said the decision ‘changes the whole project’.

The Heysel stadium is currently located in the middle of the 15 hectare site - le Plateau du Heyzel - where Neo Brussels is set to rise, Thielemans explained. It will now be possible to create a large entertainment centre with sports, leisure and conference facilities, he said. ”We will have more green after THE REALTY

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the project is developed than we have now. This will make it all possible as a matter of fact.”

candidate groups following the initial stage in the tender process for the 300,000 m2 mixed-use Neo development project.

The candidate combinations are UK REIT Hammerson, Soficom Development and Codic; French listed retail specialist Klepierre, AG Real Estate and Wereldhave Belgium; and European listed property giant Unibail-Rodamco, CFE and Besix.

During his introductory address, Thielemans pointed out that Brussels currently does not have facilities to host major international conferences for more than 1,000-1,200 visitors.

Thanks to the plans to move the Heysel stadium, Neo Brussels will be able to accommodate an entertainment hall for 15,000 visitors and conference facilities for 12,000 delegates. “New hotels will also be needed on the site,” he noted. At present, the site boasts just one three-star hotel, he added. “For some reason, CEOs seem to prefer to stay in five-star hotels,” he joked.

The three groups are now in the process of detailing their proposals to the city and regional authorities, Thielemans said. The tender for the first phase of the project covers the shopping centre, leisure facilities, housing, offices and car parks.

Construction is slated to begin in 2014.

In December last year, the authorities in Brussels shortlisted three

“It is a very demanding affair to develop a completely new borough

INTERVIEW 13

“ We will have more green after the project is developed than we have now” Freddy Thielemans , Mayor of Brussels

Project at REALTY within the city,” Thielemans said.

‘It is very audacious, but the project has won the three biggest possible contenders in the world. We’re very proud of that. It shows that the project is believable and liveable, and that it is attracting attention.’

In terms of investment, the project is not really a novelty, but the competitive dialogue which the authorities are currently engaged in with the three contenders is, Thielemans said. “It’s something new which has never been done before.

This is a much more dynamic process and means we have the opportunity not to stick too closely to the theoretical part of the project.

By discussing through dialogue, we are able to come to the best possible solutions.

We’re very happy with that.”

Freddy Thielemans, Mayor of Brussels

14 THIS WAS REALTY 2013

Thank you for a great

REALTY 2013 SEMINARS

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THANK YOU FOR A GREAT INTERVIEW REALTY 15

REALTY 2013

TEAM

BUSINESS TALK

POWER MEETINGS

16 growing appetite for listed property exposure

Alex Moss, Managing Director of UK-based consultants Consilia Capital

Surge in real estate securities funds reflects growing appetite Demand for real estate securities has surged since the global financial crisis as a property allocation gained through the listed sector plus the attractive income returns appeal to a broader range of investors, Alex Moss, Managing Director of UK-based consultants Consilia Capital, and a member of the European Public Real Estate Association’s (EPRA) Research Committee told the PropertyEU seminar.

He said that assets under management of real estate securities funds grew 68% to $250 billion from 2007 to 2012, according to research

by Consilia Capital and Property Funds Research for EPRA. The study estimates that the number of real estate securities funds increased 39% to 677 in the same period. The most recent figures show that total assets under management for Exchange Traded Funds (ETFs) pegged to FTSE EPRA/NAREIT real estate indices jumped 85% to $8.7 billion in the 12 months through to February this year.

The tax efficiencies of the real estate investment trust regime means that global REIT funds now account for seven of the ten largest global real estate funds, with $22.2 billion of assets under management as of the end of 2012, Consilia’s report showed.

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“Asset managers have digested academic research showing that over the longer term the listed real estate sector delivers returns comparable to those generated by directly owned buildings. Researchers have supplied evidence to convince more investors that having listed real estate in a portfolio can also improve returns and diversify risk,” Moss said.

The report highlights how diverse investment strategies using real estate securities have brought depth and increased liquidity to the market.

Beyond the large group of income return-focused investors, the broader and growing uses of the listed sector can be categorized into the following investment strategies:

INTERVIEW 17

“ Having listed real estate in a portfolio can also improve returns and diversify risk”

Alex Moss, Managing Director of UK-based consultants Consilia Capital

for listed property exposure • Long/short strategies: Returning to favour among traditional long only specialist asset managers as well as new hedge fund entrants to the market.

This approach first came to prominence in 2006/7 but foundered in the global financial crisis.

• Platform investing: this allocation to sector-specialist real estate asset managers was traditionally the preserve of the private market. Specialist management teams with unique assets mean this approach can also apply using listed real estate.

Forum Partners has executed this strategy globally, with over 70 investments in 17 countries.

Platform investing can be used to build blended listed and non-listed institutional portfolios,

incorporating the most attractive assets from both sectors - an investment strategy developed by the largest Dutch pension funds.

• Listed real estate is potentially a key component of new Defined Contribution pension strategies in the UK. Auto-enrolment into Defined Contribution pension schemes in the UK is now underway and one of the biggest challenges facing the industry is how to provide a suitable real estate platform for DC schemes as has been successfully pioneered in the US. Legal & General has provided one UK solution, by combining their managed property funds with a Global REITs Index Tracker Fund.

• Listed real estate securities as a proxy for real estate investment: Recent institutional investor mandate awards, including one from the National Council for Social Security Fund of China, target global REITs as a liquid, tax-efficient proxy for the global real estate market.

• Demand is increasing for real asset (or inflation protection) funds, which include listed real estate.

For example Cohen & Steers Real Asset Fund holds 25%-30% in global real estate, 25%-30% in commodities, 15%-25% in global natural resource equities and up to 20% in other assets such as gold.

18 Regulator’s REIT Threat may not Materialise

Axel von Goldbeck, Managing Director of the German property industry association ZIA

German Property Association says

Regulator’s REIT Threat The German property industry is confident that a proposal by the country’s financial regulator BaFin to treat domestic listed real estate investment trusts (REITs) as funds rather than operating companies under new EU legislation will not be fully enacted, avoiding the possibly that the entire $825 billion global REIT sector could be thrown into turmoil.

If implemented, BaFin’s proposal under the EU’s Alternative Investment Fund Managers Directive (AIFMD) due to come into effect in July, would bar many equity funds from investing in REITs unless they are created as “funds of funds.” It would deter investment from countries such as China, which restricts holdings of foreign funds, and it would also raise costs by subjecting REITs to derivatives clearing, margining and depositary requirements.

The European Public Real Estate Association (EPRA) said in April that the trade body was “alarmed” that the German regulator’s proposals could be adopted by a number of other regulators, particularly in Europe.

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But Axel von Goldbeck, Managing Director of the German property industry association ZIA told the PropertyEU seminar that he believed the most potentially damaging outcomes would be avoided.

INTERVIEW 19

“ The most potentially damaging outcomes would be avoided” Axel von Goldbeck, Managing Director of the German property industry association ZIA

may not Materialise “BaFin received over 300 submission on its AIFMD consultation paper and was overwhelmed by worldwide response on its REIT section. REITs may be a very small listed sector in Germany, but they are a very large industry worldwide and can’t be disregarded. If the regulator pushes through its proposals some REITs may not survive and what happens to foreign REITs that are investing in Germany? I’m confident that in the end we will not be confronted with this problem.”

In mid-June there were signs that BaFin was moderating its original position as Von Goldbeck predicted when he said it would consider whether a REIT was an investment fund or a genuine operating company on a “case-by-case” basis.

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UNITY IN DIVERSITY 21

Unity in Diversity! e r A s r e m to s u C r u o Y e r e h Go W effects Retailers struggling with the and g din of recession, falling spen embracing e-commerce, can thrive by d build modern tools to identify an mers and sto cu ir relationships with the location al by breaking down tradition cu ir stomers, patterns to accompany the sed seminars attendees at two retail-focu on Thursday heard. better “Today’s consumer is freer, l networks, informed and, despite socia fore. more isolated than ever be r retailers To connect to this consume product/price need strong brands. A good rre-Yves mix is no longer enough,” Pie sultancy con Bolus of shopping centre rketing Devimo Consult told the ‘Ma orrow’ of the Shopping Center of Tom k between seminar. “Internet is the lin ”. nd the consumer and the bra

st Technologies available to mo way that the d ge an ch consumers have they approach shopping. rmarket chain Customers of Belgian supe de-reading Delhaize can use their QR co products in smartphones to order food res would sto locations where traditional bway stations, not be feasible, such as su store of and then pick them up at the their choice. up Diesel’s Shoppers using clothing gro g rooms can ‘Mirror-on-the-wall’ changin in various post pictures of themselves Facebook l na new outfits to their perso their friends. pages, inviting ‘Likes’ from who are Consumers in Lego stores duct will look pro r ula curious how a partic ed to hold when assembled simply ne one of the its packaging up in front of sks to see its company’s ‘Digital Box’ kio contents being assembled.

22 UNITY IN DIVERSITY

“ We wanted to be seen as a retail brand and for that we needed to bring the country to the city” Rudy Lefèvre, Division Director of Aveve Retail

Build a community Internet makes products more vivid, but the same technology can be dangerous for retailers. ‘Price check’ applications allow smartphone users to scan products they are interested in to get the best prices. These are often not to be found in the store where the customers happen to be.

“Retailers need to build a community with their customers, get their feedback, understand where they are and what they want”, explained Bolus. “Invite customers to make things, co-create, or to participate in the on-line funding of innovative new products”.

Blogs giving product and location updates, rewards for checking in at particular stores and payment wallets such as those operated

by Starbucks are all tools that link customers with stores.

“Stores will become less of a place from which to distribute goods and more an extension of consumers’ lifestyles,” concluded Bolus. “They will be ambassadors for brands where customers can expect to be.

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Bringing the countryside to the city Speakers at the seminar ‘Unity in diversity. How and why retailers increasingly choose a variety of locations,’ which was also held on Thursday, reinforced Bolus’s conclusions. Leaders of two of Belgium’s largest retail chains described how their companies had found success by targeting customers in non-traditional ways and locations.

Agricultural wholesaler and garden centre chain Aveve began as a buyers’ cooperative for farmers in the 19th century and is now the largest in Belgium. With a traditional customer base found mostly in rural and suburban areas, and a product offering that tends to be bulky, most Aveve stores were large outof-town outlets. In 2009 the group began an expansion into urban areas, opening a series of Aveve City mini-stores in downtown areas of Belgian cities that were aimed

squarely at city-dwellers with little or no garden space.

“We wanted to be seen as a retail brand”, explained Rudy Lefèvre, Division Director of Aveve Retail, “and for that we needed to bring the countryside to the city”.

Aveve City stores are tailored for consumers who, despite living in the city, want to experience nature, pets and natural products.

In the stores, they receive support, advice and hands-on product demonstrations from personnel trained to deal with urban customers, for whom even the basics of nature can be a revelation.

“By getting to the customers early, we can hold on to them as their interests grow”, commented Lefèvre.

“We build up our brand, and in a saturated market without a strong brand, you’re nothing”.

INTERVIEW 23

Rudy Lefèvre, Division Director of Aveve Retail

Making customers want to come back While Aveve was moving into the city, Standaard Boekhandel, Belgium’s largest chain of booksellers, was going the other way. Bookstores have traditionally been concentrated in downtown locations, however in 2007 the company decided to expand to the edge of cities, opening branches in motorway service stations and other locations convenient for its customers.

“Our customers don’t differentiate between town centres and out-of-town. They go where it suits them at any particular moment”, Guido De Smet, Commercial Director at Standaard Boekhandel told the seminar.

Standaard Boekhandel’s out-of-town locations have been designed to be anything but the ‘grey boxes’ normally associated with retail parks on the edges of urban areas. They tend to be larger than downtown stores, with coffee corners, abundant seating and reading sections built around particular themes.

“When customers take the time to visit our outof-town stores, it’s extremely important that the experience makes them want to come back”, commented De Smet. “We need to give the customers what they want, where they want it”.

Internet strengthens the brand Pierre Yserbyt of retail consultants Serdiser saw the Internet as the factor that is driving the move away from traditional retail locations.

During a panel discussion at the ‘Unity in diversity’ seminar he said, “E-commerce is a real revolution. Zoning rules limiting what can be sold where make no sense if customers can buy on-line from another country.”

In 10 years time, 50% of all purchases will be made on the Internet.

“Customers will want to physically touch goods such as clothing, but they will then go off and order on-line what they’ve just touched,” Yserbyt predicted.

The retailers on the panel acknowledged the potential effects of e-commerce, but felt that each sector will be impacted differently.

“In our branch logistics is a problem that needs to be solved before e-commerce can take off”, commented Lefèvre, “Internet is not a threat for Aveve, rather it’s a chance to strengthen our brand and reach more customers”.

While Standaard Boekhandel’s De Smet recognized the impact that e-commerce had had on book sales in other countries, he expects Belgium to develop at a slower pace. “Belgians don’t react so quickly to new trends and with a high concentration of locations, 70% of our customers who order on-line chose to pick their purchases up in a store”.

Guido De Smet saw digital products as posing a far greater threat than digital transactions. “For booksellers, e-readers will be a bigger problem than Amazon”.

24 UNITY In DIVERSITY

Luc Plasman, Managing Director Belgium of shopping centre developer Wereldhave

The mall is not dead to new Despite the plans of retailers to expand the and ps sho locations away from existing ered trigg rapid changes in shopping patterns high by e-commerce, the traditional mall and street is not dead. large Pierre Yserbyt saw a trend towards very ment shopping centres offering a full entertain experience to the public, together with high s. tion loca e prim quality shopping streets in Luc Plasman Managing Director Belgium of shopping centre developer Wereldhave, if agreed. “Some types of shops do better ion Fash they remain close to similar stores. ls or for instance will still concentrate in mal will shopping streets. So while e-commerce new elop not affect decisions to dev shopping centres, it will certainly impact how the look inside”.

“Eventually”, Plasman pointed out, “it’s consumers who will decide what comes where”.

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INFO 25

26 Realty 2013 facts & figures

Facts & figures

99%

6.333 +2 0 %

2009

intend to visit the next edition

participants 3.056

2010

3.415

2011 2012

Realty met or exceeded expectations

95,8%

4.815 5.305

2013

6.333

T A R G E T 20 14 : 6. 50 0 pa rt ic ip a nts Performance report from visitors General impression:

7 ,5 10 Developer End user

Public Authority

Visitor profile Developer Broker Architect & planner Investor Local & public authority Supplier Construction company Consultancy firm Trade federation & academics Engineering company

Broker

The Realty

Financer

Value Chain Investor

Law firm & notary Bank (financer)

Architect

Project Management company Broker Consultant

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Construction com pany

Engineering Planning

Corporate End User Media & Press

2013

2012

2011

overview 27

126 +3 %

exhibitors

2009

13

lty 20 a e R f o s n o i Impress

84

2010

102

2011

fessionals o r p ll a r o f t nd even A must-atte national and s s e in s u b e stat in the real e l internationa he point t o t s n io t a t d presen Crowded an

113

2012

122

2013

126

T A R G E T 20 14 : 13 0 ex hib it ors Performance report from exhibitors

s reat contact g h it w l a n Professio ive feedback it s o p f o t lo and a

8 10 Visitor quality: 7,55 10 Visitor quantity: 7,80 10 General impression:

Type of companies visitors are looking for at Realty Developer Investor / Bevak / Sicafi / Reit

g ep presentin e k o t m r o f t pla le The perfect as an examp ls e s s u r B d Belgium an ate policy t s e l a e r le b a for a sustain

International Investors 2013: 96 investors (10% growth compared to 2012) Special topics in 2013: • Retail

• Urban development • Sustainable development • International Investment Opportunities

Construction company Architect Public authority Broker Study/Planning Office Project manager Asset Manager Services

Top 5 Geographic origin of foreign visitors

4,8% UK

9,3% Other

10,6% Germany

21,8%

Luxembourg

29,3% The Netherlands

24,5% France

FLASH FORWARD > 2014

MEET US AT REALTY 2014 SAVE THE DATE 13, 14 & 15 MAY 2014 info: www.realty-brussels.com contact: Edouard Moreels Phone: +32 9 241 94 20 - Mobile: +32 475 69 36 80 - info@realty-brussels.com Follow us on Twitter: @realtybrussels