Robust GDP growth, wage rises and price inflation are the drivers of the retail sales across the CEE region– says Colliers International in its latest research report “Exceeding Borders - Retail Market in the CEE-13* Region”
MAPIC 2017, November, 15 – A new report from global retail property experts, Colliers International, reviews and prognosticates on the traditional shopping centre (TSC) opportunity across the CEE-13* region. The report discusses market fundamentals, retail space availability, top active retailers and leisure operators as well as rental terms & incentives.
Key findings of the report include:
GDP growth wage rises and price inflation will drive CEE consumer demand
We project retail sales expanding across the region between 4.2%-7.6% per annum in EUR terms in 2017E-2026E. Robust GDP growth, wage rises and price inflation should be the drivers.
Mark Robinson, CEE Research Specialists in Colliers International explains:
“The base for that growth is wide: CEE-13’s demographic footprint of 160 mln inhabitants encompasses over a quarter of the population of Europe outside of Russia. The purchasing power of these inhabitants, whilst generally low, lies in a huge range: it was just 5.9% of the European average in 2016 in Ukraine, up to 61.2% in Croatia. Of the capital cities, only Lithuania’s Vilnius (100.7%) exceeds the European average.”
Shrinking and ageing population is the key macro risk for retail demand
The most recent demographic data suggests a steadying of emigration pressures. Net birth rates are negative in several countries. We see shrinking and ageing populations as the key macro risk for retail demand in 10 out of the 13 countries.
Joining the supply side club: Very extensive pipeline of TSCs in Belarus, Poland and Ukraine
Our estimates suggest continued expansion of the varying densities of TSCs by over 200,000 m2 between 2018-20 in each of Belarus, Czechia, Estonia, Poland, Romania, Serbia and Ukraine. Some expansion pipelines are very extensive (Belarus, Poland and Ukraine are all over 500,000 sqm), even in the face of consideration of the fast potential growth of online retailing.
Retail space availability highest in Poland
The highest modern retail stock level is recorded in Poland (11.3 mln sqm GLA), Romania (3.65 mln sqm GLA) and Czechia (3.45 mln sqm GLA), but taking into the consideration the population, the highest density ratio is in Estonia (598 sqm/1,000 inhabitants). Traditional shopping centres dominate most of the analyzed markets: relatively high availability of retail park space is recorded in Czechia, Poland, Romania, Hungary and Slovakia. The largest retail parks in CEE countries were developed by Inter IKEA Group, who counts also as the most active developer in this region. Shopping centres are concentrated in the capital cities in the majority of the analyzed countries. The exceptions are Poland and Czechia where the highest concentration is in regional cities (86,7%) and (77.7%) respectively.
Fashion is the main sector in the branch mix but gastronomy, leisure and entertainment are expanding
Shopping centres are the main focus for the international and domestic retail chains in most of the CEE-13 countries. Branch mixes of the majority of schemes are very similar – fashion is the main sector, followed by shoes, leather & bags and health & beauty. Inditex Group and H&M dominate the fashion representation in TSC.
In line with the inexorable e-commerce growth, the role of gastronomy, leisure and entertainment in shopping centres is expanding especially in Poland and the Baltic countries, where extensions of existing schemes are taking place to set up cinemas, kidsplays and fitness clubs. Lidl is the most active player in the food sector while Cinema City in the entertainment branch.
The highest number of annual debuts is recorded in Poland and Czechia
New brands, mainly from the fashion sector, are continuously entering the CEE markets. The highest number of annual debuts is recorded in Poland and Czechia, followed by Slovakia, Hungary, Serbia, Romania as well as Ukraine. Hamley’s entered Poland and Czechia, LPP Group debuted on the Croatian, Serbian and Belarussian markets. Zara Home entered Estonia and Lithuania.