c a l & e a s t ern eu op r sia ce n t r al & e a s t e rn...
TRANSCRIPT
Prices:Euro zone: EUR 10.00Poland: PLN 35.00 (incl. Tax)Czech Republic: CZK 257.00Ukraine: UAH 10.00Slovakia: EUR 10.00Russia: USD 15.00United Kingdom: GBP 3.50Romania: RON 39.00USA: USD 15.00
Covering: Baltics, Belarus, Bulgaria, Croatia, Czech Republic, Hungary, Kazakhstan,Montenegro, Poland, Romania, Russia - CIS, Serbia, Slovakia and Ukraine
RETAILGUIDE
Volume 21, Number 1, November 2015
Central & Eastern Europe Russia - CIS
Euro zone: EUR 10.00Poland: PLN 35.00 (incl. Tax)Czech Republic: CZK 257.00Ukraine: UAH 10.00Slovakia: EUR 10.00Russia: USD 15.00United Kingdom: GBP 3.50Romania: RON 39.00
Investment cover final print 2.indd 1 05/11/15 09:58
8th Annual
InterContinental Hotel, Warsaw, Poland28th January 2016
www.RetailAwards.eu
PARTNERS FOR 2016
CEE RETAILAWARDS
#CEERetailAwardsFor further information contact:
Craig Smith/ +48 604 144 769 / [email protected] Kaliszewska/ +48 601 382 667 / [email protected]
Premier Partners:
Auditor:
Venue Partner: Car Rental Partner: PR Solution Partners:
Supporting Partners: Media Partner:
Energy Software Partner:
REAL ESTATESoftware & Services
Warsaw, Poland
JURY MEMBERS:
Rafał ChrapkowiczPako Lorente Sp. z o.o.President
Krzysztof ApostolidisFabryka Biznesu Sp. z o.o. - investor of SUKCESJAPresident of Board
Laurence PaquetImmochan PolandCEO
Matteo MarzottoPercassi
Dieter KnittelDeutsche Pfandbriefbank AGDirector Europe, Real Estate Finance International
Joanna JóźwiakH&M Hennes and Mauritz Sp. z o.o.Expansion Manager CEE
Markus PinggeraDeichmannHead of Expansion and Law CSEE
Marek SkoczylasMedia Saturn Holding PolandHead of Real Estate Poland
Krzysztof BocianowskiLPP S.ALeasing and Expansion Director
Waldemar MadajczykGuess PolandExecutive Board member
Arne BongenaarActeeum GroupManaging Director
Adrian J. HeymansECC Real EstateCEO
Ilona Gryszko-RedoAlshaya PolandHead of Property CEE
Wojciech SztubaTPA HorwathManaging Director
Petr ŽahourH&M Hennes & Mauritz CZLease Manager
Andrzej CzarneckiEURO-net Sp. z o.o.Development Director
Kasia VolkmanTK MAXX,Head of Acquisitions & Real Estate, Poland/Austria
Marko SchönebeckHunkemöller DeutschlandReal Estate Manager
Paweł OskrędaSmykProperty Director
Philippe BeurtheretImmochan HungaryGeneral Manager
Anton SemenenkoRapa GroupHead of Retail Businesses, Member of the Board of Directors
Artur KazienkoKAZAR FootwearOwner
Dorota WiaderekGO Sport Polska Sp. z o.o.General Director
Serdar ErsoyDefacto RetailChief Growth O� cer (CGO)
Karolina Bykowska“GINO ROSSI S.A” ; “SIMPLE”Investment & Development Manager
Alexandra von der GrünAdidas AGDirector Real Estate Western Europe
Paweł Korobacz“YES Biżuteria”Expansion & Organisation Director
Nevena KosticRetail SEE Group d.o.oOwner / Director
Mihai DuicaH&MLease Manager Romania & Hungary
Ivana WinbladhUK Trade & InvestmentRegional Lead for Retail
Vijay GoelLondon Chamber of Commerce Asian Business Association (ABA)Chairman
Christoph GesslerC&A Buying GmbH & Co. KGHead of Global Real Estate
Ronan MartinCarrefour PolskaExpansion and Shopping Centers Director, Vice President of the Board
Małgorzata GabryśOTCF S.A.”4F”Director Expansion & Investment
Harald AichbergerC&ALeiter Expansion/Immobilien Österre-ich/CEE/SEE
Award Sponsors:
Public Relations
Luxury Spirit Partner: Cocktail Partners:
Central & Eastern Europe Russia - CIS
z-gate investment2.indd 1 05/11/15 10:03
8th Annual
InterContinental Hotel, Warsaw, Poland28th January 2016
www.RetailAwards.euPARTNERS FOR 2016
#CEERetailAwardsFor further information contact:
Craig Smith/ +48 604 144 769 / [email protected] Kaliszewska/ +48 601 382 667 / [email protected]
CEE RETAILAWARDS
Premier Partners:
Award Sponsors:
Auditor:
Venue Partner: Car Rental Partner: PR Solution Partners:
Supporting Partners: Media Partner: Energy Software Partner:
REAL ESTATESoftware & Services
Public Relations
Luxury Spirit Partner: Cocktail Partners:
Warsaw, Poland
JURY MEMBERS:
Rafał ChrapkowiczPako Lorente Sp. z o.o.President
Krzysztof ApostolidisFabryka Biznesu Sp. z o.o. - investor of SUKCESJAPresident of Board
Laurence PaquetImmochan PolandCEO
Matteo MarzottoPercassi
Dieter KnittelDeutsche Pfandbriefbank AGDirector Europe, Real Estate Finance International
Joanna JóźwiakH&M Hennes and Mauritz Sp. z o.o.Expansion Manager CEE
Markus PinggeraDeichmannHead of Expansion and Law CSEE
Marek SkoczylasMedia Saturn Holding PolandHead of Real Estate Poland
Krzysztof BocianowskiLPP S.ALeasing and Expansion Director
Waldemar MadajczykGuess PolandExecutive Board member
Arne BongenaarActeeum GroupManaging Director
Adrian J. HeymansECC Real EstateCEO
Ilona Gryszko-RedoAlshaya PolandHead of Property CEE
Wojciech SztubaTPA HorwathManaging Director
Petr ŽahourH&M Hennes & Mauritz CZLease Manager
Andrzej CzarneckiEURO-net Sp. z o.o.Development Director
Kasia VolkmanTK MAXX,Head of Acquisitions & Real Estate, Poland/Austria
Marko SchönebeckHunkemöller DeutschlandReal Estate Manager
Paweł OskrędaSmykProperty Director
Philippe BeurtheretImmochan HungaryGeneral Manager
Anton SemenenkoRapa GroupHead of Retail Businesses, Member of the Board of Directors
Artur KazienkoKAZAR FootwearOwner
Dorota WiaderekGO Sport Polska Sp. z o.o.General Director
Serdar ErsoyDefacto RetailChief Growth O� cer (CGO)
Karolina Bykowska“GINO ROSSI S.A” ; “SIMPLE”Investment & Development Manager
Alexandra von der GrünAdidas AGDirector Real Estate Western Europe
Paweł Korobacz“YES Biżuteria”Expansion & Organisation Director
Nevena KosticRetail SEE Group d.o.oOwner / Director
Mihai DuicaH&MLease Manager Romania & Hungary
Ivana WinbladhUK Trade & InvestmentRegional Lead for Retail
Vijay GoelLondon Chamber of Commerce Asian Business Association (ABA)Chairman
Christoph GesslerC&A Buying GmbH & Co. KGHead of Global Real Estate
Ronan MartinCarrefour PolskaExpansion and Shopping Centers Director, Vice President of the Board
Małgorzata GabryśOTCF S.A.”4F”Director Expansion & Investment
Harald AichbergerC&ALeiter Expansion/Immobilien Österre-ich/CEE/SEE
FORUM GDANSKFood meets fashion
OPENING 2017
For leasing inquires please contact: Małgorzata Słowik, [email protected] Anna Piotrowska, [email protected] tel. +48 22 22 22 800
FORUM GDAŃSK
Diverse food offer
Over 25 food court and full-service restaurant units with unique terrace seating overlooking the historic old town of Gdańsk.
Program: • 62.000 sqm GLA, 220 units including flagship stores, largest multiplex cinema and inner-city supermarket• Largest public transport hub• New central square of Gdansk• Combination of individual buildings, streets and squares• The Gdansk Historic Heritage Centre and new Tourist Information office within the project • 1.100 parking spaces
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Editorial
Regional quotes
Regional Investment
SEE Overview
Regional
Regional CEE Retail Awards
CEE Investment & Green Building Awards
Poland OverviewNEE Overview
NEE Overview
NEE Overview
Growing investor interest in CEE retail
The CEE investment market is on the up with
a huge amount of money looking for a home.
This is particularly benefi ting the retail sector with
CBRE recording a 99 percent increase on 2014 with
€2,153 million in deals as of the end of the third
quarter. However, these fi gures can be misleading
as retail investment tends to grab the headlines, of-
ten due to the large lots sizes and some analysts ar-
gue that appetite for retail assets is not signifi cantly
higher than other commercial sectors.
Poland’s retail sector grows in the agglomerations, with new trends on the rise
While Q3 brought about just a modest sprinkling of
new completions, Poland’s retail sector has continued
to be defi ned by strong growth in the major agglomera-
tions, while at the same time continuing to ride a wave of
redevelopments, refurbishments and expansions of exist-
ing retail stock.
Limited supply prevents overheating
Although retail delivery has been limited, new supply
is expected to resume in 2016-2017, with the delivery of
schemes under construction. New retailers are competing
for space in the best-performing shopping centres, and
high-street locations in Prague, although there are limited
locations for new development.
page 8 page 54
page 36
Growing investor interest in CEE retail
Turkish fashion brands expanding
across South Eastern Europe
Expo Real Overview
Retail excellence honoured at the 7th annual EuropaProperty
CEE Retail Awards Gala
Region’s top real estate fi rms recognised at EuropaProperty’s
5th annual CEE Investment & Green Building Awards
Poland’s retail sector grows in the agglomerations,
with new trends on the rise
Professional of the Year: Bogoljub Karić
on Dana Holdings and his BK Group
Demanding market dynamics
creating survival of the fi ttest mentality
Large scale pipeline developments mark the Baltics retail landscape
72
40
42
44
48
52
54
64
58
68
60
70
74
78
Russia quotes
Tri-City Overview
Poland Retail
Poland Warsaw
Poland Investment
Hungary Overview
Czech Rep. Overview
Bulgaria Overview
Slovakia Overview
Croatia Overview
Romania Overview
Serbia Overview
Russia Overview
Ukraine Overview
2015
18-20 November
MAPIC 2015
The International Real Property Market
Palais des Festivals, Cannes, France
www.mapic.com
25-26 November
EEA Real Estate Forum & Project Awards
Fairmont Grand Hotel,
Kiev, Ukraine
www.eeaawards.com
2016
28 January
8th Annual EuropaProperty CEE Retail Awards
InterContinental, Warsaw, Poland
www.retailawards.eu
1- 4 March
22nd International Fair for Industrial
Automation AUTOMATICON
EXPOCENTRE XXI, Warsaw, Poland
www.automaticon.pl
15-18 March
MIPIM
Palais des Festivals, Cannes, France
www.mipim.com
30-31 March
2nd Annual EuropaProperty
NEE Real Estate Awards
Crowne Plaza Minsk Hotel, Minsk, Belarus
www.neeawards.com
11-13 April
International Property Show
World Trade Centre, Dubai
www.internationalpropertyshow.ae
21 April
11th Annual EuropaProperty
SEE Real Estate Awards & Forum
Radisson Blu Hotel, Bucharest, Romania
www.seerealestateawards.com
25-29 April
Hannover Messe
Hannover, Germany
www.hannovermesse.de
26 May
CEE Energy Awards
InterContinental, Warsaw, Poland
www.ceeenergyawards.com
6-7 June
The 11th Annual CEE GRI
Prague, Czech Republic
www.globalrealestate.org
16 June
4th Annual EuropaProperty
CEE Manufacturing Awards
InterContinental, Warsaw, Poland
www.manufacturingawards.eu
20-22 June
IX SEE Real Estate
Belgrade Exhibition & Conference
Belgrade, Serbia
www.rebec.rs
Positive retail fundamentals for Romania
The Romanian retail market is again attracting
developers and retailers with economic growth and
a strong rise in consumption recorded for the fi rst
half of the year. Cushman & Wakefi eld research indi-
cates that retail sales rose by 4.2 percent year-on-year
for May. This is seen as an incentive for retailers to
pursue more ambitious expansion plans in both Bu-
charest and regional cities such as Timisoara, Craiova
and Brasov, which can still support an increase in
shopping centre stock.
page 60
Tri-City: Baltic Boomtown
Commercial potential of PKP S.A. real estate
Construction of new retail in Warsaw gaining momentum
Good perspectives remain for retail investment
Limited space to meet retail demand
Limited supply prevents overheating
Bulgaria’s outlook never looked brighter
Retail development in regional cities
Development in regional cities
Positive retail fundamentals for Romania
Need for new development to meet retail demand
Retail demand slowing, but a gradual recovery forecast
Multi opens Forum Lviv, its fi rst shopping centre in Ukraine
Real EstateEvent Calendar
Editorial
The quality of CEE shopping centres is seen as improving as
“fourth or fi fth generation” centres are delivered across the
region. Prime stock is now regarded as close to the standard
of centres found in Western Europe when it comes to design, as in
many cases they are developed by pan-European developers.
However, CEE shopping centres also lag behind Western Europe
in terms of tenant mix, as the top schemes are still missing some
brands that are present in Western Europe. In addition, some niche
products are lacking, as is the provision of quality food and gastron-
omy outlets. Retailers are also pursuing cautious expansion policies
by entering markets through franchises rather than direct entry.
This also applies to the more established Polish and Czech markets.
At the moment it is unlikely that the markets will become over-
heated as was the case in some countries. The under-performance
and failure of some schemes has been analysed and pipeline is now
more correlated to the local retail and economic environment, in
order to avoid failures.
Developers are conducting detailed research in relation to loca-
tion, income spread in the area and wider macro-economic factors.
Timing is seen as a central issue in the schedule of construction, and
in this way a number of established retail developers have planned
projects that have been on hold for several years, while the devel-
opers and their advisers wait for the most advantageous date for
the start of construction. This calculation obviously brings together
a number of issues such as predicting average income, and there-
fore spending power, and the sourcing of anchor tenants in the
three-year development time. These issues facing developers have
also extended to the political and legal sphere in some markets as
legislation directly aff ecting the retail sector has been introduced at
very short notice with no clear indication of the long term implica-
tions for the retail industry.
Obviously this more rational approach from developers is infl u-
enced by lenders who are conducting their own detailed economic
research and have been imposing stricter lending conditions. This
often involves a higher equity contribution from developers and
a better quality of pre-lets.
From a positive perspective, established European retail develop-
ers and more optimistic investor/developers are increasingly devel-
oping more niche shopping centres and projects in smaller second-
ary cities as the markets in some capital cities are seen as close to
saturation. Research has indicated that these projects will only be
sustainable if a centre is delivered with an appropriate size and ten-
ant mix. This has not always been the case in recent years.
Developers are implementing these practices in less established
markets where very limited retail development has resulted in
a shortage of supply to meet the demands of retailers looking to
enter the market, although debt fi nance is still more expensive and
diffi cult to source.
Investors are increasingly looking to the development option as
there is a limited stock of retail product in CEE and buyers tend to
keep hold of their purchase once an acquisition has been concluded.
Gary J. Morrell
Central & Eastern Europe
Russia-CIS
RETAIL GUIDE
Volume 21, Number 1,
November 2015
Publishing House
Premier Media Sp. z o.o.
Al. Jerozolimskie 81
ORCO Tower, fl oor 13, offi ce 13.01
00-001 Warsaw, Poland
Publisher
Craig Smith
+48 604 144 769
Sales & Marketing Director
Anna Kaliszewska
+48 601 382 667
Editorial Director
Winston Norman
+48 506 535 293
Editor
Gary J. Morrell
+36 703 199 068
Journalists
Gary J. Morrell
Winston Norman
Elie Issa
Alex Webber
Yuri Drazdow
Key Account Manager
Sylwia Gajda
+48 501 091 751
Marketing Department
+48 (22) 586 30 29
+48 (22) 586 30 29
Poland Country Manager
Anna Kaliszewska
+48 601 382 667
Hungary Country Manager
Gary J. Morrell
+36 1 217 34 25
+36 703 199 068
Romania Country Manager
Mihaela Mazilescu
+40 21 781 25 93
+40 722 517 680
Russia CIS Regional Manager
Mikhail Barkovskiy
+ 48 (22) 586 30 10
Ukraine Country Manager
Irena Lisowska
+ 48 (22) 586 30 10
Administration
+ 48 (22) 586 30 10
Subscription
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Graphic
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WARSAW’S TWOBRIGHTEST STARS
PLANNED OPENING1H 2018
Globe Trade Centre S.A., phone: +48 22 60 60 700, e-mail: [email protected]
6 Retail Guide 2015
Regional Quotes
Martin Sabelko – Managing Director CEE, CBRE Global Investors
Despite the wider challenges retail real estate is facing, investor demand for
retail product in CEE remains very high, but with a clear focus towards domi-
nant schemes as an indication that investors are factoring in that even if such
schemes give more exposure to a single asset, at least the likelihood of that
asset remaining a footfall generator is signifi cantly higher. As demand for domi-
nant shopping centres is far outstripping supply, signifi cant yield compression
occurred in 2015 widening the yield gap with prime offi ce product. Poland and
the Czech Republic lead the way, but it can be expected that other CEE coun-
tries will increasingly be targeted as investors chase both product and yields
now that yields for prime dominant shopping centres in Poland or the Czech
Republic have compressed to just above the 5 percent mark. With demand out-
stripping supply, a situation expected to last as the development pipeline is fi -
nite and many assets are now owned by long-term holders, yields are expected
to remain under downward pressure for as long as fi nancing costs remain low.
Dieter Knittel – Director, Deutsche Pfandbriefbank
This has been a very good year for retail in CEE. A number of large trans-
actions took place and pushed retail to over 40 percent of total investment
volume, demonstrating continued investor interest. In the prime market seg-
ment, the lack of retail asset opportunities and certain cities with excess retail
space may constrain investment activity. The Czech Republic has been, for the
fi rst time, the leading investment market taking over 40 percent, followed by
Poland with around 30 percent of the overall market. However, we have also
witnessed Hungary and Romania making a comeback with close to 10 percent
each. Investors are moving up the risk curve looking at good assets in second-
ary locations, or prime investments in capital cities in other CEE countries. There
is greater diversity of active investors across CEE with the established European,
US investors and local money being joined by Asian and Middle Eastern capital.
We are seeing larger portfolio deals, especially with a pan-CEE focus and foreign
money is buying into local platforms. Prime yields are expected to remain at
least stable. There is a supportive fi nancial environment with low cost of debt.
David Hay – CEO, AFI Europe Romania
We believe that the retail market in the region, and especially in Romania,
will continue to grow and develop in the near future. The demand for malls and
commercial centres is derived from retailer demand to expand, which is a result
of sustainable and profi table sales. There are still challenges along the way of
developing centres, such as costs of securing the main anchors, which have in-
creased and can reach in extreme cases 20 percent of the project’s costs or large
ticket size fi nancing for development projects in secondary cities. The fact that
in the following period developers in Romania are developing new shopping
centres in Bucharest and sustainable cities such as Brasov and will expand the
existing schemes, represents clear proof of how vibrant the retail market still is.
Robert Martin – Principal/Head of Central Europe, Europa Capital
Retail assets in CEE are becoming more sought after as institutional inves-
tors search for yield amid an increasingly expensive Western Europe. The Pol-
ish principal cities and Prague remain the places where investors want to be,
as recent transaction pricing has indicated. Budapest and Bucharest are now
starting to see some signs of resurgence in investor interest. The region’s stead-
ily increasing consumer spending should slowly translate into an improving
occupational market; however, many of the main cities are close to saturation
leading to increasing vacancy and rental decline. Many tenants are using this
background to reduce their occupational costs by requesting turnover-based
leases or downsizing or consolidating existing stores. This can generate oppor-
tunity to take on refurbishment and repositioning projects, if the asset has been
priced to refl ect this.
Regional Quotes
Martin Erbe – Head of International Real Estate Finance, Helaba
The Polish retail market will continue to boom. Poland ranks fi rst in Europe
with annual sales growth of around 6.3 percent, vacancy is at a low level (espe-
cially when compared to some offi ce market vacancies), interest from tenants
and investors remains high and developers are planning and completing new
schemes of all sizes. The big advantage for all parties in retail compared to of-
fi ce is the wide variety of product – big shopping centre vs. small retail unit,
Capital vs. small town, new vs. old established centre, high vs. low yields. But as
some markets have already reached the saturation level (or perhaps beyond)
banks will become cautious fi nancing new centre developments in these re-
gions. Certainly more welcome to banks are extensions of shopper-proven lo-
cations with a track record and existing infrastructure.
Ronan Martin – Expansion and Shopping Centres Director,
Vice President of the Board, Carrefour
The Polish retail market is very competitive. It not only struggles with the cur-
rent price defl ation, but also declines in customer loyalty. Each year it becomes
more saturated in each format and faces the rising importance of e-commerce.
In this fi eld only those investors and retailers who can respond faster to custom-
er expectations and changes in their behaviour will succeed. Carrefour, thanks
to its multi-format approach and the strategy aimed at extension, remodeling
and re-commercialization of assets, is able to off er tenants and customers new
and modern retail space. The investors need to focus on innovations as well.
That’s why Carrefour invests not only in modern marketing, events and ani-
mations, but also in digitalization, sensory marketing and initiatives aimed at
increasing the shopping experience and bringing comfort to the consumers’
shopping trip.
Artur Kazienko – Owner, Kazar
Kazar decided to spread its wings internationally due to the limitation of
available premium shopping malls on the Polish market. Consequently, we are
now successfully running franchise stores In Romania, Hungary and UAE. After
much market research, and due to well-established cooperation with landlords
who are successfully running CEE projects, we are a trendsetter which is fi ll-
ing a niche market with regard to quality, styles and price. Markets we have
decided to focus on are Germany, Austria, the Czech Republic, Slovakia, and
the Baltic States, where our fi rst store will open in the Riga Alfa Mall this No-
vember. Further, the fi rst Kazar cooperative store in the UK will open in March
2016 in Westfi eld. Currently we are in negotiations with a strong retail group
from Ukraine, as all through the current situation the purchasing power in our
operating sector is growing.
Arpad Torok – CEO, Trigranit
The CEE retail sector has witnessed relatively calm months in 2015 with only
a few new developments, and the projects in the pipeline predict a similarly
quiet period over the next months. Only three shopping centres opened up
so far in 2015 in the secondary Polish cities adding 81,300 sqm GLA to the pol-
ish retail stock. Apart from these new developments, the extension of three
shopping centres and the refurbishment of one other centre was carried out in
Poland, while no new openings happened in Hungary or in the Czech Republic.
Also in Slovakia the fi rst opening took place in October with the opening of
the Forum Poprad Shopping Centre in Poprad. The presence and activity of
private equity funds brings forward the market with buying retail assets, like the
sale of MOM Park Shopping Centre and Offi ce Park or the Focus Park in Rybnik.
Although Warsaw had no shopping centre development this year, in the next
2-3 years signifi cant growth is expected in modern shopping centre schemes.
Retail Guide 2015 7
8 Retail Guide 2015
Regional Investment
CEE investment acti vity is on track for a record level in 2015
Gary J. Morrell
Growing investor interest in CEE retail
The CEE investment market is on the
up with a huge amount of money
looking for a home. This is particularly
benefi ting the retail sector with CBRE
recording a 99 percent increase on
2014 with €2,153 million in deals as of
the end of the third quarter. However,
these fi gures can be misleading as retail
investment tends to grab the headlines,
often due to the large lots sizes and
some analysts argue that appetite for
retail assets is not signifi cantly higher
than other commercial sectors. Further,
there is a limited supply of available
retail product as investors tend to
hold on to their assets, and this acts as
a barrier to market liquidity.
T he largest single transaction in the
fi rst half year in CEE was the pur-
chase of the Palladium shopping
centre in Prague by Union Invest from Han-
nover Leasing for €570 million. Palladium
opened in 2014 and consists of 40,000 sqm
of retail and 19,000 sqm of offi ce stock.
The development is a landmark building
that was built onto the façade of a former
military barracks in central Prague. A loan
facility for the transaction was provided by
Bayern LB and Helaba banks.
“With several large deals that originated
in 2013 closing in the next few months and
further assets coming to the market later
this year we currently register over €1 bil-
lion of shopping centre investments for
2015,” commented Katarina Brydone, As-
sociate Director of Capital Markets at CBRE
in the Czech Republic, who advised Union
Investment on the deal.
In another deal that refl ects the strong
investor demand for shopping centres
with a strong track record, Atrium Euro-
pean Real Estate acquired a 75 percent
interest in the 38,000 sqm Arkady Pankrac
shopping centre in Prague from Unibail/
Rodamco for around €168 million. The cen-
tre was completed in 2008.
Following these transactions the Czech
Republic currently leads in terms of invest-
ment volume with 43 percent of CEE as
a whole, followed by Poland with 28 per-
cent, Romania with 11 percent, Hungary
10 Retail Guide 2015
with 10 percent, Slovakia with 2 percent,
and the SEE countries recording a 6 per-
cent share, according to JLL.
JLL predict that CEE investment activity
is on track for a record level of investment
activity in 2015. “With the fi nal quarter of
the year often representing one of the bus-
iest periods for our investment teams, and
looking at the pipeline of deals that are in
advanced stages, we predict that the CEE
regional volume could reach the €8 billion
mark by the year end. Should the latter
happen, it would put 2015 at the highest
level since the economic downturn and
third highest in the past 12 years,” said
Kevin Turpin, Head of CEE Research at JLL.
To date retail investment volume stands
at around €661 million for Poland, which is
Atrium purchased a 75 percent interest in Arkady Pankrac
Regional Investment
already surpassing fi gures for 2014, when
total retail investment volume was €570
million, according to JLL. There are also
several retail investment transactions at
advanced stages of negotiation, which indi-
cates that the record €1,307 billion recorded
in retail investment volume for 2013 could
be surpassed. The latest deal is the purchase
of Centrum Riviera in Gdynia by Union In-
vestment for around €300 million. Poland
benefi ts from its sizeable supply of retail
assets in the several major secondary cities.
With prime retail yields at an estimated
7 percent for Hungary and 7.75 percent
for Romania these markets provide a pre-
mium on Prague and Warsaw with yields of
5.25 and 5.50 respectively.
In one of the biggest transactions in
Hungary in recent years a group of inves-
tors led by Morgan Stanley Real Estate in
partnership with the Hungarian developer
and investor, WING and the Austrian retail
manager and investor, CC Real purchased
a Budapest portfolio consisting of the
31,500 sqm MOM Park shopping centre
and the adjacent 19,000 sqm offi ce build-
ing in Buda, and two additional offi ce cen-
tres from a fund managed by AEW Europe.
“The Morgan Stanley/AEW deal will
open investors’ minds to Hungary once
MOM Park in Budapest, bought by Morgan Stanley lead group of investors
again. While the occupational fundamentals have been there
for a while, investors have struggled to answer the question
as to who to exit to. However, the weight of a player such as
Morgan Stanley will surely open eyes to what the market has
to off er,” said Mike Edwards, Head of Capital Markets Markets
Hungary and CEE Valuation at Cushman & Wakefi eld, who ad-
vised the purchasers on the deal.
The transaction is the largest retail sale in Hungary since the
50 percent disposal of the Allee shopping center in Budapest
for around €100 million. However, the question remains as to
what further retail assets could become available as owners
of the six best performing shopping centres are holding onto
their assets, and the three major pipeline projects are currently
on-hold.
The investment market in Romania has been dominated by
NEPI and Globalworth Real Estate in recent years, who have
been prolifi c investors and developers. In what has been de-
scribed as “the largest ever transaction in Bucharest of a single
asset” NEPI purchased the 38,000 sqm Promenada Mall from
Raiff eisen Evolution (RE) for €148 million. The latest delivery in
Bucharest is the fully let 70,000 sqm Mega Mall by the Austrian
Real4you group, and NEPI has invested €165 million in the pro-
ject.
In the biggest recent transaction in Serbia, NEPI purchased
the Kragujevac Plaza from Plaza Centres for a reported €38.5
million. Nemanja Savcic, Country Manager at NEPI Serbia, de-
scribes the strategy of the investor as to enter the market in
major and secondary cities through the acquisition of retail
assets. “If there are no existing opportunities then we will fi nd
suitable locations and develop our own centres. There are no
obvious exit strategies and we are here for the long term,” he
said.
In Belgrade there is only 100,000 sqm of traditional shop-
ping centre space in a city of 1.65 million people and if one of
the three major shopping centres becomes available it would
be snapped up by investors with the yield premium and from
a demand perspective there are waiting lists in existing centres
as retailers are waiting to enter the market.
Mike Edwards – Head of Capital
Markets, Hungary & CEE Valuation,
Cushman & Wakefi eld
Investors are willing to spend mon-
ey in Hungary and in the Morgan
Stanley/AEG deal Morgan Stanley
brought in WING and CC Real as
experienced retail centre operators.
The challenge for Hungary is the lack
of strong sustainable shopping cen-
tres in regional cities as is the case
for Poland. Retail fundamentals are
improving in Hungary but there is
a lack of liquidity after two of the six major centres have been traded
over the past two years, although we have had a lot of approaches
for retail from investors. There is currently a high interest in CEE retail
and this is not limited to specialist retail investors.
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14 Retail Guide 2015
SEE Overview
Turkish fashion brands expanding across South Eastern Europe
S outh East Europe (SEE) has always
been an important bridge in trade
between East and West and in recent
years we have seen a rise in international
brands expanding in the region from both
sides of the continent.
In 2015 Retail SEE Group published on
its business portal retailsee.com over 1,000
news articles on the expansion of interna-
tional brands across the SEE region, and we
can see that Western high street fashion
retailers that have established themselves
in the market are now facing rising com-
petition from the expansion of high street
fashion brands from Turkey.
Turkey has already positioned itself as
one of the leading clothing manufacturers
in the world. By combining the nations tex-
tile production skills with Western fashion
design, well planned marketing strategies
and competitive pricing policies Turkish
fashion brands are on the rise towards
global fashion retail expansion.
According to company statements of
several Turkish fashion brands that have
been actively expanding in South East Eu-
rope, the SEE region presents a strategic
starting point for their further expansion
into Western Europe.
Looking back on the main news head-
lines here is a selection of Retail SEE Group’s
top fi ve Turkish fashion brands that are on
the rise in the SEE region:
LC WAIKIKI
LC Waikiki, one of the fastest growing
Turkish fashion retailers, has pinpointed
the SEE region as their “Gateway to West-
ern Europe”.
In August 2015 they enhanced their
strong presence in the region by entering
the Serbian market with their fi rst store
opening in Belgrade. According to com-
pany representatives, LC Waikiki intends to
pursue further expansion in Belgrade and
nationwide next year. Serbia is an addition
to their existing retail network in the SEE
region, which includes Albania, Bosnia and
Herzegovina, Bulgaria, Macedonia, Kosovo
and Romania.
The brand was established in 1985 and
today operates approximately 540 stores
across 25 countries. Developed under the
motto “everybody deserves to dress well”,
the brand off ers modern, good quality and
competitively priced clothing, shoes, bags
and accessories for all family members of
all ages within stores above 1,000 sqm in
size.
Over the next eight years the retailer has
announced that they aim to reach a total
of 1,500 stores, seeking to become one of
Europe’s top three clothing retailers.
KOTON
Koton, one of the leading Turkish fash-
ion retailers, has recently expanded its
retail presence in SEE by opening its fi rst
store in Croatia, located within the newly
developed Mall of Split.
Established in 1988 in Istanbul, Koton
has more than 377 stores in 25 countries
worldwide. Within the South East Europe
region, Koton currently operates stores
in Albania, Bosnia and Herzegovina, Bul-
garia, Kosovo, Macedonia, Romania and
Serbia.
Its stores in the region range between
1,200 to 2,000 sqm, positioned on main pe-
destrian high streets and in modern shop-
ping centres. The brand off ers a wide range
of fashion apparel, footwear, bags and ac-
cessories for men, women, teenagers and
children at an aff ordable prices. The chain
is known for its good quality, modern and
reasonably priced garments, which refl ect
the latest fashion trends.
Contributed by
Nevena Kostic
Director,
Retail SEE Group
The typical retail store size ranges be-
tween 80 to 220 sqm, and the company
expands directly and through franchise
partners. Established in 2005, Jeordie’s also
has four stores in Turkey and one store in
Kazakhstan, with future plans to continue
expanding on a global scale.
COLIN’S
Colin’s, a Turkish fashion retailer owned
by Eroglu Holding, has been actively ex-
panding on the Romanian market this
year, opening new stores and announcing
plans to reach 25 units in the country by
2016. Within the SEE region, Colin’s is also
present in Albania, Bulgaria, Serbia and is
seeking to enter Bosnia and Herzegovina,
Croatia, Montenegro and Slovenia both di-
rectly and through franchise partners.
The label’s core product range is den-
im, while the accompanying assortment
consists of fashion apparel, bags and ac-
cessories for both men and women. The
company produces high quality, innova-
tive, modern and aff ordable garments, tar-
geting consumers aged 18 to 28. The store
sizes range between 250 and 400 sqm,
while primary locations of interest include
shopping malls, outlet centres and retail
parks in major cities.
Colin’s is a fast growing fashion brand
established in 1983 in Istanbul and today
has more than 600 stores in 38 countries
worldwide.
SEE Overview
Ingo Nissen – Managing Director,
Sonae Sierra Romania
In Romania, where we are focused in the
region, recent outlooks refl ect a rising trend
on overall consumption. This increase in
business volume is also accompanied by
increased desire for more leisure and new
experiences, which become dominant in
purchase decision making. So when think-
ing of tomorrow’s shopping centre we see
a development towards an integrated shop-
ping and leisure experience rather than just
purchasing. This evolution emerges from
new consumer desires, representing a set of
opportunities that fuel new shop and leisure
off ers. This change turns the shopping centre
into a “social venue”, where visitors purchase
goods, services, leisure, but above all of them:
a priceless social experience. So we head to a
shift from the simple physical purchase into
a comprehensive integration of the physical,
digital and enjoyable moment when off ering
shopping experiences.
TUDORS
Tudors, men’s shirts and accessories
brand, owned by the Turkish company
Ayaydin Tekstil Turz. Tic. Ltd, signed a re-
gional partnership in mid 2014 with Ser-
bian retail company BJN d.o.o to expand
the brand in Serbia, Montenegro, Romania,
Bulgaria, Croatia, Slovenia, Hungary, Slova-
kia and the Czech Republic.
In 2015, BJN has been actively expand-
ing the Tudors retail network to six stores
in Serbia and two stores in Montenegro,
while seeking new locations and franchise
partners for the brand in the before men-
tioned countries.
The average size of its stores is about 50
sqm, which are located on main pedestrian
high streets and within modern shopping
centres. The brand off ers modern, well-
tailored shirts, t-shirts, knitwear as well as
complementary accessories such as ties,
cuffl inks, bow-ties and belts, catering to
men of all ages and occupational groups.
According to company representatives,
its competitive advantage lies in its quality
of products manufactured in Turkey, prod-
uct design that follows the latest fashion
trends and aff ordable pricing policy with
an average price of €16 per item.
Tudors was established in 2011 and to-
day has 145 stores in Turkey and 20 stores
in Germany, Poland, Iraq, the United Arab
Emirates, Macedonia, Serbia, Romania,
Bosnia and Herzegovina.
In the past two years alone Tudors has
opened 80 stores with a mission to con-
tinue its rapid international expansion in
order to become in the near future the
number one retail brand of men’s shirts
worldwide.
JEORDIE’S
Jeordie’s, a men’s fashion brand owned
by Meba Textile from Istanbul, has been ex-
panding in the SEE region since 2011. To-
day the company operates 9 stores in Croa-
tia and 8 stores in Bosnia and Herzegovina,
whilst it is preparing to enter Romania, Ser-
bia and the Czech Republic next year.
The brand off ers modern formal and
casual fashion, accessories and perfumes
for men of an age group between 16 and
above. According to company representa-
tives, their competitive advantage lies in
their designs that follow the latest men’s
fashion trends, quality of materials and af-
fordable pricing policy.
Retail Guide 2015 15
16 Retail Guide 2015
Regional Briefs
ICSC’s Baltic States Annual Conference places retail “At the Heart of the Communities”
M ore than 150 retail real estate
professionals converged in Tal-
linn, Estonia for the 9th ICSC
Baltic States Retail Real Estate Annual
Conference. The conference theme “Des-
tination Retail: At the Heart of the Com-
munity” attracted local and international
expert speakers who discussed the current
economic outlook for the region as well as
how shopping centres are at the heart of
investment, city regeneration, the commu-
nity and most importantly in the hearts of
consumers. Andrew Phipps, EMEA Head of
Retail Research, at CBRE shared his insight
into the expansion potential of food & bev-
erage in shopping centres and explored
how shoppers interact with food & bev-
erage in diff erent retail formats before in-
troducing a panel discussion with Valerija
Lieje, Partner at Behrens M&A Internation-
Jonathan Hallett – CEE Region Leader,
Cushman & Wakefi eld
The top retail schemes are still miss-
ing some brands that can be seen
in Western Europe, especially in the
gastronomy, premium food and af-
fordable luxury segments. However,
in terms of the overall quality of the
retail experience, the region’s shop-
ping centres are not far behind their
Western European counterparts.
Western Europe has much more development in niche markets
such as transport retail or large theme park style shopping cen-
tres. However, CEE is catching up very quickly and is now subject
to similar trends as Western Europe. Poland, with large but less
affl uent cities, has a diff erent landscape to the Czech Republic
with less high streets, fewer retail parks and retail boxes, although
it has around the same saturation of shopping centres. Hungary
has a much lower shopping centre stock, mostly due to the more
diffi cult macro-economic environment and thanks to the Buda-
pest eff ect.
Dominika Jedrak – Director,
Research and Consultancy Services
Shopping centres in the Czech Republic and in Hun-
gary are similar to Polish ones. There are traditional
shopping centres as well as specialized schemes, retail
parks and mix-use schemes, which connect retail, of-
fi ce and hotel features. Apart from local retail chains,
there are also the same brands as in Poland. Then best
examples are: Zara, H&M, Deichman, Marks&Spencer
and Sephora. The main diff erence between shopping
centres in Warsaw and in Budapest is their localization.
In the capital of Hungary, due to the lack of vacant land, the retail schemes are
located mainly on the outskirts of the city. In Prague, shopping centres are slightly
smaller than in Warsaw, the maximum number of tenants slightly exceeds 200.
Their off er (fashion, shoes and accessories) is no diff erent than in Polish cities but
entertainment & leisure sector is better developed. Apart from cinemas and fi tness
clubs, there are also ice rinks, swimming pools, spa & wellness centres as well as
children day care. What is interesting, in some Prague shopping centres, the super-
market anchor off er is very well developed. Apart from typical shopping centres in
Prague, there are also projects with a luxury off er located mainly in the city centre.
Compared with Poland, retail parks are far more popular in the Czech Republic.
al, Normunds Labrencis, Country Manager
- Latvia at SIA Forum Cinemas and Vladimir
Janevski, General Manager Baltics at Pre-
mier Restaurants Latvia SIA (DL for McDon-
ald’s Baltics) who analysed the F&B and
entertainment sectors in the Baltics. The
keynote presentation, by Shannon Quilty,
CSM, Partner at Senteo and former Head of
Retail Property Management at JLL Russia,
addressed how to develop relationships
with the local communities by touching
on what is currently done and crucially,
what can be done better. She insisted on
the importance of creating value, design
experience and memories for customers
to transform a rational decision into an
emotional one and a one off engagement
into a long-lasting relationship. Marije
Braam-Mesken, Senior Associate, Head of
EMEA Retail Strategy & Research at CBRE
Global Investors also presented “The New
Customer” and showed how they are in-
fl uencing and changing shopping centres‘
portfolios. “After analysing four types of
customers, we have come to the conclu-
sion that predictable patterns of consumer
spending no longer apply. Instead we see
new types of consumers in our shopping
centres that are defying their usual gender,
age and income categories,” Marije said.
Mike Morrissey, Executive Vice President of
ICSC said: “Our Baltic States Annual Confer-
ence is an important event for the region.
It’s great to see so many delegates in at-
tendance to hear from a diverse range of
speakers from across the world.”
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INVESTMENTGUIDE
Volume 20, Number 1, October 2015
Central & Eastern Europe Russia - CIS
Prices:Euro zone: EUR 10.00Poland: PLN 35.00 (incl. Tax)Czech Republic: CZK 257.00Ukraine: UAH 10.00Slovakia: EUR 10.00Russia: USD 15.00United Kingdom: GBP 3.50Romania: RON 39.00USA: USD 15.00
Covering: Baltics, Belarus, Bulgaria, Croatia, Czech Republic, Hungary, Kazakhstan,Montenegro, Poland, Romania, Russia - CIS, Serbia, Slovakia and Ukraine
INTERNATIONAL MEDIA PARTNER
Interview with Ikea Russia, general director Amin Michaely.Ikea Russia is expanding the most successful chain of retail centres in Russia with over 14 shopping centres, 275 million visitors a year, 2 million sqm retail space, 3,000 stores,
with. For retailers who are in Russia already:and support. Being the largest shopping operator in Russia, we invest our money, time and expertise into creating day-out destinations and providing constantly growing footfall. We are committed to the Russian market. We have a long-term investment strategy for improving existing centres and building new shopping centres in order to remain the reliable and caring partner for retailers. “ For retailers who are not working in Russia: “If you plan to grow your business, come to Russia - the biggest country in the world with a population over 146 million people. Russia has huge potential for economic development and now is the right time to prepare your entry in order to take advantage of the growing market when the economy starts recovering. We are here to help: we offer a captivating retail environment, and deep un-derstanding of local market and international business expertise”
EXPO REAL 2015 UNDERLINES CONFIDENCE IN THE SECTOR with a record number of EuropaProperty Investment Guides, 6000+ distributed at the expo and surrounding hotels: • Interest in the European property market remains high
• 37,857 participants from 74 countries A busy three-day trade fair, a full schedule of meetings, all the real-estate decision-makers gathered together in one place, and business talks at every stand: Between October 5 and 7, 2015, EXPO REAL in Munich was once again the No. 1 meeting point for the property sector. “We already knew that sentiment was good at the moment. But what we have seen here at EXPO REAL in the feedback from the participants is fantastic,” enthused Klaus Dittrich, Chairman & CEO of Messe München. “This trade fair is the place to discuss the burning issues of the day in the property sector: themes such as affordable housing (even more topical in view of the migration situation), digitalization, demographics and changing yield expectations resulting from strong rises in purchase prices.” These points were also right at the top of the agenda for Dr. Barbara Hendricks, German Federal Minister for the Environment, Nature Conservation, Building and Nuclear Safety: “We are facing the biggest housing challenge for decades: How can we create more affordable housing in Germany? We are currently putting together an extensive package of measures to mobilize all state and private-sector options. EXPO REAL is an excellent forum for this.”
Armin Michaely, IKEA Russia
Helaba Bank section, Sunday afternoon Octoberfest
Marcin Juszczyk, Capital Park
Brian Jenkins, Multi Corporation
Romania Investment Panel
Richard Wilkinson, Erste Group Immorent
Main entrance to EXPOREAL
AFI Romania, Emma Toma, Tal Roma
Arpad Torok, Trigranit Corporation
City of Warsaw stand
Michael Sternicki, Aareal Bank Brian Patterson, White Star Real Estate
Warsaw Stand cocktails, another successful year
Robert Dobrzycki, Panattoni Europe
Craig Maguire, Cushman & Wakefi eld
Craig Smith Publisher EuropaProperty Investment Guide
Aleksandar Opsenica, REBECS
Philip Dunne, Prologis Europe Aleksandra Dawidczyk, Sharman ChurchJason Sharman, CEO, Sharman Church
James Turner, Balmain AM
Anna Wiosna, Hochtief Polska
Pawel Kuglarz, Wolf Theiss
P3 annual stand cocktails and once again with over 100 VIP guests attending from the CEE region
George Mula, Integrated Finance Group Petr Suchanek, Hard Rock Hotels
Aleksandra Dawidczyk, Sharman Church
Jason Sharman, CEO, Sharman Church
Jeroen van der Toolen, CEO, Ghelamco
Southeastern Europe investment/development panel
Peter Oberlechner, Wolf Theiss
Ciprian Glodeanu, Wolf theiss
Romania & Transylvania region are attacting new investors every year - 3rd year at Expo Real
Daniel Bienias MD Poland, CBREJeroen van der Toolen CEO, Ghelamco
Czech Republic investment discussion panel
Ian Worboys, CEO, P3
Aneta Rogowicz-Gala, Cushman & Wakefi eld Tom Listowski, Cushman & Wakefi eld
Georg Blaschke, Helaba Bank
Martin Erbe, Helaba Bank
Thomas Staats Deutsche HypoRobert Bodzenta, Inter-BUD
Mark Richards, MACE Group
Martin Sabelko, CBRE Global Investors
Mo Barzegar, CEO, Logicor
Thomas Staats, Deutsche Hypo
Beata Latoszek, Deutsche Hypo
Charles Kingston, Publisher REFIRE
Artur Tomczyk, CEO Poland, SPIE Peter Michael Perwas, Gateway Capital Partners
Maja Biesiekierska, Prelios Real Estate Advisors
Andrea Boeri, Prelios Real Estate Advisors
Patrick Delcol, BNP Paribas
Piotr Gozdziewicz BNP Paribas
Marcel Sedlak, HB Reavis Group
ICSC Europe: Advisory board handover to new chairman
Alexander Otto, CEO, ECE to Josip Kardun, CEO, Atrium Group
Prologis - Women in Real Estate Forum
20 Retail Guide 201520 Retail Guide 2015
Professional of the Year: Bogoljub Karić on Dana Holdings and his BK Group
Ben Jones
How long has Dana Holdings been oper-
ating in Belarus and other countries?
Dana Holdings has been operating in
Europe, the Balkans, Russia, the former So-
viet Union and the Middle East countries
for over 40 years. We have completed such
high-tech projects as the main treasury of
the Central Bank in Moscow, and such stra-
tegic developments as an airport complex
with customs, a hotel and the required in-
frastructure for severe winter conditions of
-50C degrees Celsius in Anadyr, the east-
ernmost town in Russia. We have devel-
oped over 5 million sqm in total in all these
countries.
How is the Dana Mall development pro-
gressing?
To date, a number of new shopping
centres have been built in diff erent parts
of Minsk, including Dana Mall, the largest
shopping centre in the country, developed
by our company. Dana Mall is at the fi nal
stage of construction, and the opening is
planned for the beginning of next year. We
have signed agreements with a range of
international and local brands, and the oc-
cupancy rate has reached 90 percent.
How are the wider geopolitical events af-
fecting business in Belarus? What is your
outlook on the potential for Belarus to
maintain/attract increased foreign in-
vestment in the retail and construction
sectors?
Belarus is a country with an exceptional
strategic location between Eastern and
talking about the Minsk World project in
Minsk, with an area of over three million
sqm. It will attract a lot of business people
and capital, and increase foreign invest-
ment, thus making Belarus the leading
country in the economy of the region.
The Minsk World mixed-use complex in
the centre of Minsk, occupying over 400
hectares. The complex off ers residential,
commercial and offi ce space and delivers
social infrastructure and everything need-
ed within the “city-within-a-city” concept.
We have received tremendous support
from the government of Belarus for my
idea of creating the International Financial
Center based on the successful develop-
ment of the International Financial Centers
in Dubai, Hong Kong, and Singapore.
We have been successfully operating in
Belarus for seven years and have signed
agreements for the development of fi ve
million sqm. By the end of this year we’ll
have completed one million sqm. We also
have a development pipeline of construc-
tion projects internationally that extends
NEE Overview
From the humble origins of a small family workshop, Bogoljub Karić has grown his
BK Group into a multibillion-dollar corporation. With interests ranging from telecoms
and media, through banking and fi nance to engineering and construction, the group
is active right across the Central and Eastern Europe markets. Dana Holdings has
completed more than 1,000 real estate projects across the CEE region developing
more than fi ve million sqm of commercial space and employing over 30,000 people.
Western Europe. It’s situated at the cross-
roads of all important trade routes from
Europe to Russia and off ers excellent op-
portunities in this respect. In addition, it is
easy to do business in Belarus and its abso-
lutely safe. Belarus has great potential for
attracting foreign investment, where there
are signifi cant tax incentives for investors.
Belarus has a strategic location between
East and West and is a founder member of
the Eurasian Union. Belarus is a member
of this free economic zone and the market
of Belarus extends to the markets of Rus-
sia, Kazakhstan and Armenia with a total
population of 484 million people. Ac-
cording to statistics from the World Bank,
released last week, Doing Business 2016,
Belarus ranks as the 44th best country in
the world to do business, which is an im-
provement from 57th last year. Belarus also
boasts a highly qualifi ed workforce and is
one of the safest counties in the world. In
the sphere of offi ce and retail real estate
Belarus has huge potential for the devel-
opment of new shopping centres and at-
tracting international brands.
Professional of the Year is one of the many
awards you have received. What is the
achievement you are most proud of so far?
Last year this international award was
given to the CEO of Amazon Europe, this
year the panel has chosen me, which is an
honour and highly appreciated. As for the
biggest achievement this year, we signed
an investment agreement for the develop-
ment of the largest project in Europe. I’m
Bogoljub Karić
Minsk City
NEE Overview
Retail Guide 2015 21
to 9 million sqm. This places our group as
one of the largest developers in Europe.
What are Dana’s longer-term delivery
plans?
As for our plans, we are focusing on the
“city-within-a-city” concept having its own
infrastructure and everything required for
living, working, leisure and entertainment
in one place. We are planning to implement
a similar project of over two million sqm
called Tesla City in Belgrade. We are also go-
ing to develop the Venice mixed-use com-
plex of over the million sqm in Moscow,
which is part of our development pipeline.
What about new developments? Will
there be more space coming online in
2016 than in 2015? What kind of stand-
ard might we be talking about here?
Could you give me any examples of a new
retail project?
This month we have launched the fi rst
stage of the Minsk World complex, so a 40
percent construction increase is planned
for our company in 2016. As part of the
Minsk World complex, which I have just
mentioned, we are planning to build
a large shopping centre and leisure centre,
which is a regional category killer and will
generate huge interest from international
brands. We are also planning to build busi-
ness-class real estate with over 400 villas in
the diplomatic quarter.
Apart from Belarus and construction,
what are the key emerging markets and
sectors for Dana Holdings and or BK
Group?
Besides Belarus and the construction
sector, our group of companies – BK Group
– covers the trade sector, telecommunica-
tions and electronic media, banking and
fi nance, the mass media (TV, radio, press
and online media), science and education
(BK University in Moscow and Belgrade –
the fi rst private universities), and charity
work (BK Foundation). We also founded
the fi rst non-governmental Association of
Manufacturers and Entrepreneurs in the
former Yugoslavia, which currently has
tens of thousands of members from all Bal-
kan countries.
What proportion of the wider BK Group
portfolio is accounted for by real estate
interests generally and Dana in particu-
lar? Is this likely to change in the future?
To date, our main activity is related to
the construction sector, especially in the
former Soviet Union countries. Our ac-
tivities in the Balkans are more varied, for
example, our company launched the fi rst
mobile telecommunications in the Bal-
kans, as well as the fi rst private TV broad-
cast and the university. However, our core
business will always remain in the con-
struction sector.
What synergies and effi ciencies are pos-
sible between Dana Holdings and the
wider activities of BK Group?
A wider range of activities and risk diver-
sifi cation can only be useful for the compa-
ny in general. For example, students of our
universities in Moscow and Belgrade are
provided with practical training, and the
best students are employed by our com-
panies. We have earned public recognition
and trust thanks to our charitable and me-
dia activities in the Balkans.
Civil society and social engagement,
through initiatives like the BK Founda-
tion and BK University, are important as-
pects of the group’s activities…
Of course, my daughter Danica personally
heads the BK Foundation, which helps pri-
marily children and refugees, provides edu-
cational grants to talented students and pro-
motes cultural values by handing out awards
to outstanding international scientists. BK
Universities in Moscow and Belgrade enrols
hundreds of students every year and a lot of
them are now successful, well-known and
leading sportspeople, managers, and pro-
fessors. Our DNA is comes from our desire
to build, enhance and improve, not only in
construction, but also in the social, cultural
and professional spheres. We are proud that
our foundation has touched and bettered
the lives of people all around the globe, and
continue to do so every day.
22 Retail Guide 2015
NEE Overview
Palazzo Mall
Demanding market dynamicscreating survival of the fi ttest mentality
Yuri Drazdow
An increase in the number of new retail
projects arriving on the commercial
estate market as well as economic
problems in Belarus owing to the
instability in neighbouring Russia and
Ukraine means that many developers
should re-evaluate their expectations.
Demand for high quality retail is still
growing, but clients now have many
more options to choose from.
“The ongoing trend of prices
dropping in all areas of com-
mercial real estate will con-
tinue, but well-planned and designed
projects still have a great chance of suc-
cess, and could generate a healthy profi t,”
commented Denis Chetverikov, Director
of Research and Advisory Department of
Colliers International in Minsk.
Retail rates fell by 20-25 percent with
increased vacancy. As a result, tenants
have the opportunity to rent a better area,
which previously they could only dream of.
The fortunate are those property owners
that have managed to build a stable cus-
tomer base and retained their existing cus-
tomers even in the current economic crisis.
One of the most crucial characteristics of
a development is that is based in a good
location. If the location is good then the
chances of generating business is also very
high. It is all about the “location, location,
location”.
“As an example, we can talk about
a third generation shopping centre Crown
on Kalvaryiskaya Street or the modern
shopping centre The Castle. Vacancy is ex-
tremely low, and rates remain high. How-
ever, many of the popular brands in those
centres are operated by the owners them-
selves. There are also examples where
developers do not attract the popular
brands, but the objects are still successful.
For example, the shopping centre Galileo
where at least periodically and observed
rotation of tenants, customers are always
off ered some new items. The shopping
centre Magnet on Dzerzhinsky Avenue,
which opened at the peak of the crisis in
the fi rst months of work fi lled with tenants
24 Retail Guide 2015
On the subject of foreign brands that
opened or are in the midst of expansions,
experts note the opening of a Sony Cen-
tre, a new sporting goods supermarket
network, Sportsmaster, Ralf Ringer, O’STIN
and Galamart, as well the geographical
expansion of the major clothing store LC
Waikiki and the expansion of the cinema
operator Silver Screen.
The most vibrant market in Minsk’s retail
segment is fast food. This market is growing
both by number of outlets as well as new
brands on the market. In recent months
Burger King opened its fi rst store in Minsk
followed by Baskin Robbins in Vitebsk. KFC
restaurants are about to start operations
in autumn. The current leader McDonalds
has increased its number of restaurants in
Minsk and plans to open new outlets in the
various regions around Belarus.
Classic catering has also been develop-
ing quite steadily. Various high end restau-
rants have opened such as The View locat-
ed on the 28th fl oor of the business centre
Royal Plaza. Coff eeshop Revolution has
fi nally come to Minsk, and as it happens
within the last six months Minsk has seen
the opening of ten new coff ee shop outlets
for coff ee lovers, and there are a few more
that are in the process of opening.
“I would like to refute the statements
that cafes and restaurants are being sold
out in large quantities in Minsk. The num-
ber of venues on off er has increased in-
deed. The catering market in particular
has grown signifi cantly over the last two
years. Therefore, the percentage of sales
has also increased as well,” a market expert
concluded.
NEE Overview
A good locati on is crucial
Developers of shopping centres are having a hard ti me
for more than 90 percent,” Denis Chetverik-
ov said.
It is expected that in the near future
Minsk’s market of large retail properties
will change signifi cantly. In the next few
months new shopping centres are to be
commissioned in Minsk, these are Gal-
lery with a gross leasable area (GLA) of
more 36,000 sqm, MOMO (GLA more than
30,000 sqm) Green City (GLA more than
40,000 sqm) and Dana Mall (GLA more
than 50,000 sqm). However, despite such
new developments potential tenants are
reluctant to step into the retail market and
current shop owners have halted their ex-
pansion plans. As a result, there could be
another round of decline in rental rates
which is due to the signifi cant excess of
supply over demand.
“Developers of shopping centres are
having a hard time. Almost all the projects
have moved into combined determination
of rental rates, in particular, the percentage
of turnover. In Belarus, at the same there
are a number of major projects for which,
even with a stable situation on the market
it would be diffi cult to fi ll vacancies and
acquire tenants. Almost all international
retailers have suspended development in
the neighbouring countries, and if they
do develop then they do it very carefully,”
noted the expert, further stating that “For
them the question of entering other mar-
kets such as Belarus is on the agenda, but
certainly not as a priority.”
Never the less, there are others who are
of a diff erent opinion. The Polish retailer
LPP SA, are one of the few companies that
are actually considering entering the retail
market at such a time. This particular group
owns fi ve diff erent brands (Reserved,
Cropp, House, Mohito and Sinsay) and they
have more than 1,500 stores, mainly in
Europe. The company’s turnover, for 2014
amounted to almost around €1.2 billion.
“Negotiations are under way with the
brands that represent the major perfume
companies, home appliances and house-
hold goods. There are intentions from
a large DIY company to also start opera-
tions in Belarus,” commented Denis Chet-
verikov, he further elaborated “It is good to
see that none of the brands already repre-
sented in Belarus have left our market.”
Furthermore, Belarusian domestic brands
are not hesitating to move forward and
are continuing to grow, utilizing the de-
preciation of rental rates. Developed and
well-known national brands such as Elam
opened a new store in the Expobel shop-
ping centre, in addition to Conte Elegant,
a textile company which opened a pilot
company store of the same name, at Gali-
leo shopping centre.
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26 Retail Guide 2015
NEE Overview
The recently opened Nodrika
Large scale pipeline developments mark the Baltics retail landscape
Alex Webber
The gentle upward trajectory enjoyed
by the economies of the Baltic States
has been mirrored by a lively retail
sector that continues to steadily expand.
While the number of new projects has
remained relatively modest, those that
are being implemented have proved
to be ambitious in both size and scope,
thereby mirroring a maturing market
that learned painful lessons during the
crisis years – and the news hasn’t just
manifested itself in bricks and mortar,
but also in pipeline developments that
suggest a bright future.
“The retail market has remained buoy-
ant, allowing developers to plan and
announce new large-scale develop-
ments, expansions and refurbishments
in all three Baltic capitals,” said Maksim
Golovko of Colliers International.
Just outside Tallinn, that meant the June
launch of the 15,000 sqm Viimsi Market,
the fi fth shopping centre to appear in what
has been previously described as “Estonia’s
richest parish”. And in spite of misgivings
that the Tallinn district is facing saturation,
stock continues to be added. Of the devel-
opments that have broken ground, with
a footprint of 130,000 sqm and a GLA of
52,000 sqm it is T1 that is perhaps the most
anticipated. Due for completion in Q3 of
2017, the €70 million project will include
space for 200 retail units and will play a key
role in the creation of a new “centre” for the
city – the bold plans include a tram link
running to the airport and an international
rail terminal.
This is not the only development that is
forthcoming: Capfi eld, who already own
six cen-tres in Estonia, plan to extend the
Norde and Lasnamae Centrum, while also
adding to their portfolio with the 2016
opening of the RAE Shopping Center. Set
in one of the fast-est growing residential
areas around Tallinn, and with a wider
catchment area of 400,000 people within
a 30-minute drive, the 20,000 sqm scheme
will be a major retail destination hub po-
sitioned right at the mouth of one of the
major entry points to the Estonian capital.
A similar situation is being played out
in Lithuania. “Investors have continued to
show great interest in successfully operat-
ing shopping centres, and while the supply
of new projects has not been huge, devel-
opers are starting to implement projects
on a larger scale,” said Saulius Vagonis of
Ober-Haus.
In Vilnius that has been demonstrated
by the October opening of phase one of
the Nordika Shopping Valley. The fi rst sig-
nifi cant launch in six years, the €50 mil-
lion complex will eventually tout a GLA
of 40,000 sqm once phase two is fi nished
in Q2 of 2016. Hoping to attract consum-
ers from as far afi eld as Minsk, Nordika is
expected to transform southern Vilnius,
thanks to a tenant base that includes sev-
eral new entrants to the Lithuanian retail
market.
“Nordika Shopping Valley isn’t just for lo-
cal resident, but a destination for families
from other parts of Lithuania as well as
neighbouring countries – we expect for-
eign visitors to make up a signifi cant share
of our buyers,” said Peter Gage-Morris, CEO
of the principal investor. Its completion
makes it the 25th shopping centre to open
in Vilnius, bringing the total GLA in the city
to 439,000 sqm.
Beyond Nordika, vacancy rates have
remained low in Lithuania, more so in
the popular shopping centres, leading to
a slight increase in rents, though mainly
the market has been defi ned by its stabil-
ity. If there has been a trend, it has been
the subtle shake-up of the tenant mix.
“Shopping centres have been actively
adjusting this with international and lo-
cal brands expanding in the market,” said
Dmitrijs Kacalovs of Colliers. “This expan-
sion into the retail market has mostly been
related to clothing and catering services.
For example, McDonald’s, Subway and Cili,
whilst new brands such as Samsung have
also entered the market.”
With no large shopping centres opened
outside the capital, the GLA in Lithuania’s
other principal cities remained at 221,000
sqm in Kaunas, 163,500 sqm in Klaipeda
and 109,700 sqm in Siauliai.
to begin in the imminent future, the Alfa
expansion is scheduled for completion in
Q2 2017, while the new-look Origo is set to
be unveiled the year after.
With memories of the economic cri-
sis still fresh – when Riga’s vacancy rates
rocketed to horrifi c levels of just under
20 percent – the current statistics make
for pleasant reading. Currently wavering
around the 2.5 percent mark, demand for
units, especially those in well-performing
shopping centre, remains high. “There is
still a very high demand for spaces in shop-
ping centres, most shopping centres are
nearly fully leased with minimal vacancy
rates,” said Saulius Vagonis. “The vacancy
rates at the largest shopping centres at
the beginning of the year were 0 percent
at Spice and Spice Home, 0 percent at Alfa,
0.3 percent at Mols, 2.6 percent at Origo,
1.9 percent at Galerija Centrs, 2 percent at
Riga Plaza, 2.7 percent at Dole and 0 per-
cent at SC Domina.”
With the economy in general looking
reasonably robust the Latvian retail sec-
tor is expected to continue to grow stead-
ily. “Retail stock will be supplemented by
a number of hypermarkets, and we also ex-
pect demand for retail premises to remain
high, however, in the context of the low
vacancies, the activity will most probably
materialize in additional improvements to
tenant mix as well as the creation of new
concepts for existing brands,” said Deniss
Kairans of Colliers.
NEE Overview
Nordika interior
Nordika is expected to transform southern Vilnius
The market has been sluggish but sta-
ble in Latvia, though a marked improve-
ment since 2014 when only one shopping
centre – the 7,200 sqm Maxima XX – was
delivered, thereby bringing the nation’s
retail stock to 627,400 sqm: 380,000 sqm
in shopping centres, 214,600 sqm in big
box developments and 32,000 sqm in
department stores. As things stand, the
market awaits news on two big develop-
ments that have both been postponed in
the past. First, Riga Akropole, a 60,000 sqm
retail project with an additional 7,400 sqm
of offi ce space as well as a wealth of facili-
ties that would include an ice skating are-
na, a food court with the capacity to hold
1,2000 diners, bowling alley and multiplex
cinema. However, construction on the
€100 million investment is not expected to
start until Q4 of 2016.
Equally frustrating have been plans for
the Daugavgrivas project, a multi-func-
tional development with over 90,000 sqm
of space earmarked for retail and a lavish
entertainment centre. Also priced at about
€100 million, the scheme has faced repeat-
ed setbacks over the years, and it’s now
widely understood that construction won’t
begin until 2018 – but even if the latest
plans do actually materialize, work will be
conducted over several stages and would
be split over the course of six to seven years.
Therefore, and in place of new devel-
opments, the Latvian market has been
characterized by renovations. “The major
shopping centres are still making improve-
ments and changes,” said Saulius Vagonis.
“For example Linstow Centre Manage-
ment, one of the key local market players,
are planning to expand their two shopping
malls: Alfa and Origo.”
These plans include the extension of
Alfa by approximately 11,500 sqm and the
expansion of Origo with a new wing six or
seven fl oors in height. Of the 40,185 sqm of
total fl oor space, 15,750 sqm space would
be for retail purposes. With work forecast
Retail Guide 2015 27
28 Retail Guide 2015
Regional CEE Retail Real Estate Awards
Retail excellence honoured at the seventh annual EuropaProperty CEE Retail Real Estate Awards GalaWinston Norman
Honouring the region’s ever-changing commercial retail real estate market, and refl ecting its
evolving nature, EuropaProperty’s seventh annual CEE Retail Real Estate Awards once again
highlighted the continued enthusiasm for the sector in CEE by recognising the best the retail
industry has to off er.
The awards, held at the fi ve-star
Intercontinental Hotel Warsaw,
brought together some 450 top
real estate professionals from the major re-
tail market sectors and were selected by an
international academy of jurors, comprised
of senior industry professionals, who pre-
sided and deliberated over the eventual
winners. The 48-strong independent jury
panel of the CEE Retail Real Estate Awards
cast their votes for one winner in each cat-
egory.
Apsys Group and the multi-brand fash-
ion retailer LPP shone the brightest on the
night picking up three awards a piece. LPP
walked off with three major prizes includ-
ing Fashion Retailer of the Year under 500
sqm for Mohito, and a double for their Re-
served brand in the Fashion Retailer of the
Year over 500 sqm category and the cov-
eted Overall Retailer of the Year.
The Apsys Group received three awards
for Property Management Firm of the Year,
highlighting the growing importance of
good asset management, as well as the
Developer of the Year. Further emphasis-
ing their success in 2014 the jurors also
voted Apsys’ Managing Director for Poland
Fabrice Bansay as this year’s Professional of
the Year.
“I must admit that I am pleased to ob-
serve that thanks to our recognized know-
how and outstanding performances, we
are approached by many owners of shop-
ping centres to manage their assets. We
do feel proud of and honoured with all of
these prizes as they have the advantage
to positioning us among the other com-
panies of our industry. It is on this special
occasion that I should like to emphasize
the great input, passion and professional-
ism of the Apsys team and I should like to
Regional CEE Retail Real Estate Awards
Retail Guide 2015 29
Award Winners
for
2014
Fitness Club of the Year: Pure Jatomi Fitness
Multi-Media Retailer of the Year: RTV Euro
Supermarket Chain of the Year: Auchan
Specialty Retailer of the Year: Costa Coff ee
Toy Retailer of the Year: Toys’R’Us
Jewellery Retailer of the Year: Pandora
Cosmetic Retailer of the Year: Inglot
Footwear Retailer of the Year: CCC
Fashion Retailer of the Year under 500 sqm: Mohito
Fashion Retailer of the Year over 500 sqm: Reserved
Newcomer of the Year: Desigual
Professional Service Provider of the Year: RegioPlan Consulting
Architectural Firm of the Year: Chapman Taylor
Law Firm of the Year: Dentons
Tax and Financial Adviser of the Year: TPA Horwath
Project Management Firm of the Year: Gleeds
Property Management Firm of the Year: Apsys Group
Consultant / Letting Agent of the Year: CBRE
Leasing Specialist of the Year: CBRE Global Investor
Bank of the Year: pbb Deutsche pfandbriefbank
Investor of the Year: Atrium European Real Estate
Developer of the Year: Apsys
Retail Park of the Year: STOP.SHOP – Immofi nanz Group – Regional
Mixed-Use Project of the Year: Kraków Główny – PKP – Poland
Extended/Refurbished Project of the Year: Galeria Mokotow – Unibail Rodamco
– Poland
Retail Project of the Year small – under 15,000 am GLA: Kraków Główny – PKP –
Poland
Retail Project of the Year medium – 15,000 sqm to 35,000 sqm GLA: Brama Mazur –
Master Management – Poland
Retail Project of the Year large – over 35,000 sqm GLA: Galeria Warminska – MGC
Invest – Poland
Shopping Center Director of the Year: Yoram Reshef – Blue City
Overall Retailer of the Year: Reserved
Overall Company of the Year: Atrium European Real Estate
Overall Project of the Year: Brama Mazur
Professional of the Year: Fabrice Bansy – Apsys
take this opportunity to express my grati-
tude to all of my colleagues,” commented
Fabrice Bansay, CEO of Apsys Polska.
Other major accolades were given to
Atrium European Real Estate, which was
recognised by the jurors for its investment
success in the region. Through 2014 the
company has continued its high-profi le
investment strategy of seeking invest-
ment opportunities in existing assets and
development projects, for example the
acquisition of Focus Mall shopping cen-
tre in Bydgoszcz, Poland. The scheme was
purchased from Aviva Investors for €122
million. The company won two awards,
including Overall Company of the Year as
well as Investor of the Year.
Master Management also received two
awards as well as high praise and recogni-
tion for their Brama Mazur shopping cen-
tre project. The centre won the Retail Pro-
ject of the Year in the medium category as
well as the coveted Overall Project of the
Year award.
Paul Kusmierz, Managing Director of
Master Management Group, said: “I would
like to thank the jury for recognizing our
considerable achievements on this project.
It was a challenging task for us, but fi nally
we delivered.”
Last year was a big year for retail devel-
opment in Poland and the project award
winners refl ected the changing dynamics
of the country’s retail development mar-
ket. Many of this year’s nominees formed
extensions, refurbishments, mixed-use
and retail park projects.
PKP’s Krakow Glowny (Krakow’s main
railway station) won two prominent re-
tail project prizes, Retail Project of the
Year in the small category and Mixed-
use Development of the Year. Extended/
Refurbished Project of the Year went to
Unibail Rodamco’s Galeria Mokotow, and
Immofi nanz’s successful regional STOP.
SHOP chain won the Retail Park of the
Year award.
CBRE Global Investors won the inaugural
Leasing Specialist of the Year award. “This
is a major achievement for our CEE opera-
tion and the group of leasing managers
supporting us,” said CEO of CBRE Global In-
vestors CEE, Martin Sabelko, proudly com-
menting on his company’s success.
The team received the award, which was
presented to CBRE Global Investors Head
of Asset Management Poland Karel Zeman
and Head of Finance Roland Bebcak, for
30 Retail Guide 2015
Regional CEE Retail Real Estate Awards
Footwear Retailer of the Year – CCC
Investor of the Year – Atrium European Real Estate Developer of the Year – Apsys Retail Park Project of the Year – STOP.SHOP – Immofi nanz Group
Newcomer of the Year – Desigual
its activities in the CEE region. “We enjoy
a reputation as retail experts who strive for
quality and high targets while keeping in
mind long-term strategy for our properties
with very demanding tenants,” comment-
ed Karel Zeman.
Another new category, which proved
very popular this year, was the Shopping
Center Director of the Year award, which
was won by Blue City’s Yoram Reshef.
Global consultants CBRE picked up the
Agency of the Year award. Walter Woelfl er,
Head of CEE Retail at CBRE commented:
“We are delighted to have been recognized
as the CEE Retail Agency of the Year. Over
the last few years we have made a substan-
tial investment in our retail platform to
ensure we can provide unrivalled quality
and depth of services, across 16 countries
in CEE. We have an integrated approach to
retail, with our consulting, leasing, man-
agement, refurbishment and transactional
teams all working hand in hand as a one-
stop shop, to ensure we deliver the highest
value to our clients.”
Additional company awards were pre-
sented to Dentons, one of the world’s
biggest law fi rms, which received the Law
Firm of the Year award. Tax and Financial
Adviser of the Year went to TPA Horwath
and Professional Service Provider of the
Year went to RegioPlan Consulting.
Gleeds again followed up last year’s suc-
cess by collecting the Project Management
Firm of the Year award. Chapman Taylor
once again picked up Architectural Firm
of the Year. Deutsche pfandbriefbank was
voted Bank of the Year.
Accentuating the strength and interest
in the region’s retail sector, 11 key retailers
were awarded on the night. Overall Retail-
er of the Year went to Reserved, (part of the
wider LPP group), which was recognised
for their continued expansion and confi -
dence in the CEE region throughout 2014,
and the Newcomer of the Year award was
received by Desigual. Other major winners
for the retailer specifi c awards included:
Costa Coff ee, Pure Jatomi Fitness, RTV-Eu-
ro, Auchan, Inglot, Pandora, Toys’R’US, CCC,
and Mohito.
The retail awards gala and forum was
organized to acknowledge and highlight
the growing international signifi cance of
the commercial retail real estate market
and related industries in the CEE region
from both a development and investment
perspective. Awards were presented to
companies in the region for outstanding
accomplishments for the year 2014.
EuropaProperty would like to thank all
the participants at the event and congratu-
late the winners. The awards for 2015, to be
held in February 2016, are set to be even
more competitive in these increasingly dy-
namic markets and challenging times.
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4th annual
32 Retail Guide 2015
Regional CEE Investment Awards
Region’s top real estate fi rms recognised at EuropaProperty’s 5th annual CEE Investment & Green Building Awards
EuropaProperty would like to thank all
those who attended the 5th annual
CEE Investment and Green Build-
ing Awards. The awards ceremony was
once again witnessed by a select group of
around 350 senior European and Central
European real estate professionals; affi rm-
ing the event’s status as a true landmark
event for the investment sector.
Companies and individuals recognised
at the awards included: investors, devel-
opers, bankers, agencies and many others
from across the CEE region. Skanska Com-
mercial Development Europe was a multi-
ple award winner in all the main categories
at the 5th annual CEE Investment & Green
Building Awards held in Warsaw on Thurs-
day 29th October 2015. Panattoni Europe,
CBRE Global Investors, Griffi n Real Estate
and Union Investment also walked away
with some of the big company prizes.
Skanska, one of the region’s biggest
developer’s, with a successful sustainable-
-development model across CEE, walked
away with three prizes, Offi ce Developer,
Offi ce Development, for their well-re-
ceived Dominikanski project in Wroclaw,
as well as receiving recognition from the
Jury for its successful disposal of offi ce de-
velopments in Krakow and Lodz in Poland.
Other investment winners included CBRE
Global Investors, winning two awards as
this year’s most successful Core+/Value
Add and Core Investor. Europa Capital was
deemed the best Opportunistic Investor, P3
Logistic Parks for Warehouse Investor, AEW
Europe as JV Investor, Atrium European Real
Estate for Retail Investor, Deutsche Asset
& Wealth Management as Offi ce Investor
and Griffi n Real Estate as Overall Investor.
Panattoni Europe’s Robert Dobrzycki
was named this year’s Industry Profes-
sional. The warehouse developer has made
quite an impact in the region and this was
recognised by the Jury with the company
also winning Warehouse Developer, and
collecting the award for best Warehouse
BTS Project for Amazon’s Fulfi lment Centre
in the Czech Republic.
Multi Development picked up two pro-
ject awards. The prolifi c retail real estate
developer saw their recently opened Fo-
rum Lviv in Ukraine win Retail Project of
the Year, and Magnolia Park in Wroclaw
received special praise for its successful ex-
tension this year.
Ghelamco’s ambitious Warsaw Spire pro-
ject, currently one of the biggest offi ce de-
velopment’s in Europe, collected this year’s
Green Building of the Future prize. The
100,000 sqm offi ce complex, due to open
next year, was deemed by the jurors to be
the best example of a sustainable offi ce
development. Plac Zamkowy, a retrofi t-re-
furbishment project in Warsaw’s old town
district, also picked up a project award.
Accentuating the strength and inter-
est in the region’s investment sector, were
the Investment Brokerage and Investment
Winston Norman
Regional
all the winners. Preparations are already
underway for next year’s event, which
promises to be even better.
The sixth annual CEE Investment &
Green Building Awards will be held on Oc-
tober 27th, 2016.
CEE Investment Awards
CBRE Global Investors – Core+/ Value Add Investor
Agata Sekula – Investment Broker
Investment Brokerage Agency – JLL
Warsaw Spire – Green Building of the Future
Investment Deal – REINO acquired Kapelanka 42B from Skanska
TPA Horwath – Tax & Financial Adviser
Retail Guide 2015 33
Broker Awards. JLL’s Agata Sekula got the
biggest cheer of the night by winning
Investment Broker of the Year. JLL also
walked away with the Investment Broker-
age Firm award.
Another personal award was handed
out to Agnieszka Grzesik from WeCARE for
Property Manager of the Year.
Apsys, a retail developer and property
manager, picked up Retail Developer of
the Year. Aecom collected Professional
Service Provider of the Year. TPA Horwath
was voted this year’s best Tax And Finan-
cial Adviser. First Title was once again vot-
ed the best Title Insurance Provider. Other
industry winners included, Dentons, CBRE,
pbb Deutsche Pfandbriefbank, Gleeds and
Kurylowicz & Associates.
On behalf of our sponsors, judges and
attendees, we off er our congratulations to
34 Retail Guide 2015
Regional CEE Investment Awards
Award Winners
for
2015
COMPANY OF THE YEAR
Professional Service Provider: Aecom
Tax and Financial Adviser: TPA Horwath
Title Insurance Provider: First Title
Architectural Firm: Kurylowicz & Associates
Law Firm: Dentons
Project Management Firm: Gleeds
Property Management Firm: CBRE
Property Manager: Agnieszka Grzesik – WeCARE, part of Liebrecht & Wood Group
Bank: pbb Deutsche Pfandbriefbank
Investment Brokerage Agency: JLL
Investment Broker: Agata Sekula – JLL
Warehouse Developer: Panattoni Europe
Retail Developer: Apsys
Offi ce Developer: Skanska
PROJECT OF THE YEAR
Extension Project: Magnolia Park – Multi Development – Poland
Retrofi t/Refurbishment: Plac Zamkowy – Senatorska Investment – Poland
Green Building of the Future: Warsaw Spire – Ghelamco – Poland
Warehouse BTS Project: BTS Fullfi ment Centre for Amazon – Panattoni Europe – Czech Republic
Retail Project: Forum Lviv – Multi Development – Ukraine
Offi ce Development: Dominikański – Skanska Property – Poland
INVESTOR OF THE YEAR
Warehouse Investor: P3 Logistic Parks
Retail Investor: Atrium European Real Estate
Offi ce Investor: Deutsche Asset & Wealth Management
JV Investor: AEW Europe
Opportunistic Investor: Europa Capital
Core+/ Value Add Investor: CBRE Global Investors
CORE Investor: CBRE Global Investors
INVESTMENT DEAL OF THE YEAR
Investment Deal – €20-50 million: REINO Dywidenda FIZ acquired Kapelanka 42 B in Krakow from Skanska
Investment Deal – €50-€100 million: Griffi n Real Estate acquired Green Horizon in Lodz from Skanska
Investment Deal – €100 million plus: Union Investment acquired Palladium shopping centre from Hannover Leasing
Overall Investor: Griffi n Real Estate
Professional of the Year: Robert Dobrzycki – Panattoni Europe
CEE INVESTMENT AWARDS
Supporting Partner:
#CEEInvestmentAwards
www.CEEInvestmentAwards.comSponsors 2015
For further information contact:
Craig Smith/ +48 604 144 769 / [email protected]
Anna Kaliszewska/ +48 601 382 667 / [email protected]
& G R E E N B U I L D I N G
Member of NORD/LB
Premier Partner:
Premier Partner 2016:
Cigar & Cognac Lounge Sponsor: Supporting Partner:
Associate Partners:
Offi cial patronage:
Award Sponsors:
Dessert Sponsor: Auditor:
SAVE THE DATEOctober 27th 2016
6th Annual
October 27th 2016, InterContinental Hotel, Warsaw, Poland
36 Retail Guide 2015
Poland Overview
Alex Webber
Poland’s retail sector grows in the agglomerations, with new trends on the rise
While Q3 brought about just a modest
sprinkling of new completions,
Poland’s retail sector has continued
to be defi ned by strong growth in the
major agglomerations, while at the
same time continuing to ride a wave of
redevelopments, refurbishments and
expansions of existing retail stock.
“In a nutshell it’s been busy: while it’s
fair to say the retail segment may have
lacked the spectacular, big ticket deals
we’ve see in the offi ce and industrial sec-
tors, it’s still been a very active time for us,”
commented Anna Bartosiewicz-Wnuk of
JLL.
Including pipeline developments, 2015
is set to surpass the last fi ve years in terms
of fi nal fi gures, with particular emphasis
pinned on the fi nal quarter when, tradi-
tionally speaking, developers have rushed
to push through their projects in time for
the Christmas season.
As things stand, modern retail stock
in Poland totals 12.58 million sqm, with
shopping centres representing 8.99 mil-
lion sqm of that number. Q3 saw an almost
token sum added – just 106,000 sqm, with
a considerable chunk of that connected to
Recently opened Sukcesja in Lodz
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38 Retail Guide 2015
the opening of Sukcesja in Lodz. Offi cially
opened on September 25th, the PLN 270
million project comprises a leaseable area
of 45,000 sqm, with over 160 units and
an entertainment area including a nine-
screen multiplex.
The fi gures relating to Q3 do not, how-
ever, represent the wider picture. With
708,000 sqm of retail space currently un-
der construction – 675,000 sqm of which is
set to take root in shopping centres – these
are exciting times for a sector that posted
a 30 percent downturn in completions the
previous year.
The key agglomerations continue to
lead the market in terms of shopping cen-
tre development, with over 60 percent of
projects under construction falling within
that sphere, and, according to forecasts,
Q4 could see as much as 330,000 sqm
added to Poland’s total shopping space.
Among others, projects that are expected
to cut the ribbon include the 50,000 sqm
Zielone Arkady in Bydgoszcz, the 23,000
sqm SuperSam in Katowice and the 31,000
sqm Galeria Galena in Jaworzno.
Looking ahead, the biggest scheme of
although is Posnania in Poznan; due to
be delivered in Q3 2016. The €300 million
shopping centre will tout a gross leaseable
area of over 100,000 sqm, with facilities in-
cluding space for over 40 medium-to-large
stores, 220 smaller units, and parking for
3,000 cars. Already promoting itself as the
largest shopping and entertainment cen-
tre between Berlin and Warsaw, the project
also promises to be at the forefront of new
shopping technologies (mobile payments,
digital maps, etc.) in a bid to ramp-up cus-
tom and compete with malls already es-
tablished in the city.
“I strongly believe that Posnania will
be for Poznan what Manufaktura became
for Lodz – a city landmark and an exciting
venue that will enrich the business, social
and cultural life of the entire Wielkopolska
region,” commented Fabrice Bansay, CEO
of the developer, Apsys.
With 80 percent of their tenants al-
ready secured, and a catchment area of
one million, that Posnania looks set to be
a success story is to fl irt with understate-
ment. Even so, Bansay’s words reveal an
interesting trend that has spiked the atten-
tion of market watchers: shopping centres
have evolved beyond being solely about
shops. In Posnania’s case, 12 percent of the
scheme’s footprint has been surrendered
to serve as a food court, while other frills
include a sizeable beer hall and other such
additions.
“All over the country we’re noticing peo-
ple are spending more and more time in
shopping centres, though not actually for
the shopping,” said Bartosiewicz-Wnuk.
“People are converting to online sales
channels for that, and we see that retail
units have instead grown more to resem-
ble showrooms for brands. The national
trend for improving food court areas is
a direct refl ection of the lifestyle changes
that are occurring in Poland, and while
Galeria Pomorska in Bydgoszcz
Poland Overview
busy shopping centres are good, people
are having to think more with regards to
how to actually ‘sell’ their space.”
As part of this progress, shopping cen-
tres have looked to new forms of arranging
space. “New formats we’re seeing include
the creation of co-working offi ces, librar-
ies and legal advice points,” said Dominika
Jedrak of Colliers, In April this year, Mille-
nium Hall in Rzeszow opened a contempo-
rary art gallery, while in June CH Batory in
Gdynia created a library outlet in coopera-
tion with the Public Urban Library.” In basic
terms, this is not just a time of growth, but
also transition.
Yet while development in the bigger
cities and agglomerations continues una-
bated, the lesser cities are stuttering. While
smaller cities – those with a population of
under 100,000 – attracted the biggest in-
fl ux of supply in 2014, this year that fi gure
has fallen to 25 percent of new stock enter-
ing the market. This, though, comes as no
surprise, and is simply a refl ection of cities
reaching their natural equilibrium in terms
of retail opportunities.
“Once a town of 50,000 has a shopping
centre of, for instance, 30,000 sqm, does it
really need any more?” asked Bartosiewicz-
Wnuk.
Instead, revitalization is the name of the
game, with many of the centres opened
in the 90s and early 2000s being updated
– and in some cases expanded – to bring
them into line with the demands and ex-
pectations of both the consumer and the
retailer. Once again, the improvement of
food courts fi gures highly in this.
“Redevelopments and refurbishments
of existing retail schemes are a crucial el-
ement of the strategy that owners and
property managers implement for aging
objects, these steps result from growing
competition and changing customer ex-
pectations,” said Edyta Potera of JLL. “In Q3,
new space in the form of extensions to Ga-
leria Pomorska, Wola Park and Factory Ur-
sus entered the market. More investments
are underway, including Centrum Franowo
in Poznan, Morena in Gdansk and ETC cen-
tres in Swarzedz and Gdansk, which are in
the process of redevelopment and refur-
bishment.”
Vacancy rates, meanwhile, have tended
to oscillate around the 2.9 percent mark for
the big agglomerations, ranging from 1.6
percent to 4 percent, with the one excep-
tion being Wroclaw where vacancies stand
at around 4.6 percent. Prime rents have
remained reasonably stable with the odd
ones ducking the trend being Poznan and
Warsaw: in the capital, prime rents have
continued to gradually spiral, with latest
data showing an average of €120 per sqm/
month.
The developers are happy, and al-
though it’s highly unlikely that this year’s
fi gures will be matched in 2016 and 2017
there’s enough to suggest a sector that’s
in rude health. And in light of this, it would
be remiss not to mention the investment
side, which has also enjoyed a positive
year that’s been busy with deals – the larg-
est being Union Investment’s acquisition
of Centrum Riviera in Gdynia for an un-
disclosed fee thought to be in the region
of €300 million. With investment volume
already in excess of the €570 million total
of 2014, it seems more than possible that
the curtain will be drawn on 2015 with
around €1.3 billion of transaction being
registered.
Riviera in Gdynia acquired by Union Investment
Retail Guide 2015 39
Poland Overview
40 Retail Guide 2015
Tri-City Overview
Ben Jones
Tri-City: Baltic Boomtown
Twenty years after the pioneers of Tri-City
retail fi rst opened their doors, the Baltic
coast agglomeration of Gdansk, Gdynia
and Sopot is on the verge of market
maturity. But while the area approaches
saturation, it is also enjoying steady
tourism money and is preparing for
a boom thanks to an upsurge in business
process off shoring.
In line with the Polish retail real estate
market as a whole, the Tri-City conur-
bation has developed to a point where
the population enjoys a diverse retail of-
fer across a wide range of schemes. The
bulk of modern retail is accounted for by
shopping centres (79 percent according to
Colliers) with 19 percent in retail parks and
remaining 2 percent in outlet centres. But
in a unique retail landscape, a wave of fi rst-
generation centres, concentrated around
the ring road, has been superseded by
a newer breed of malls running through
the three city centres, forcing the older
stock to embark on bold remodelling and
modernisation projects.
Much of the Tri-City’s stock was built in
the 1990’s with more than half of it over
10 years old and only around 20 percent
developed in the last fi ve years, giving
Gdansk and its environs much older retail
stock than average. But with sales strong
through buoyant domestic demand and
steadily increasing retail tourism, many
fi rst-generation schemes have launched
modernisation projects and some have
extended in order to compete with the at-
tractions of newer centres.
A prime example is ETC Gdansk, built
in 1994, which is being fully refurbished,
while the Galeria Morena, also in Gdansk,
is being rebuilt entirely and will grow to
33,000 sqm (from 24,000 sqm) by the end
of 2015. In addition to such extensions and
upgrades, two major new centres are al-
ready under construction: the 34,000 sqm
Galeria Metropolia and the 64,000 sqm
Forum Gdansk, formerly named Forum
Radunia, as well as a smaller local scheme
of 7,000 sqm, Verus retail park. All told, the
market is expecting over 110,000 sqm of
new stock to be delivered in the next 12-18
months following a drought of new open-
ings since 2012.
Spread across six hectares adjacent
to the city’s main railway station, Forum
Gdansk represents a major collaboration
between developer Multi Development,
the City of Gdansk, which donated 3.1
hectares of land to the project, and Polish
State Railways (PKP). The plans incorpo-
rate major infrastructural and transport
improvements for the city in addition to
64,000 sqm of retail and leisure in addition
to residential blocks.
Rejuvenating the site of the hay and
crayfi sh markets, the project envisions the
creation of a transport hub with the rail,
road and new SKM (Rapid Urban Rail) sys-
tems intersecting. As much as 2.5 hectares
of the site will cover existing railway tracks
as well as a major new SKM stop. A mod-
ernised road layout will complete the
transport hub, breathing life into a part of
the city that has hitherto struggled. Until
recently the area played host to a bazaar
run by local traders with little to attract
other shoppers or visitors. The hope now is
that the new transport will connect Forum
Gdansk and the Main Station with the Old
Town and other tourist areas close by.
“The infrastructure and confi guration
of the city will be improved,” Patrycja
Dzikowska, Cushman and Wakefi eld’s as-
sociate director of consulting and research
said. “It’s almost a kilometre from the main
train station to old-town Gdansk, so trans-
portation will be greatly improved. The
connection will be very convenient so this
may also attract people from Nowy Targ
and the Old Town to that part of the city.”
Forum Gdansk will bring some 220
stores to the market along with a Gdansk
Heritage Centre to draw in more visitors.
Multi ’s Forum Gdansk is a very ambiti ous project
With the new thoroughfare created by the
scheme, the hope is that high-street retail
will grow.
“In the downtown area of Gdansk there
is only one small scheme: Madison, which
is less than 20,000 sqm,” commented Pa-
trycja Dzikowska. “So there is a shortage of
good quality retail space in the city centre
of Gdansk. We should see more local busi-
nesses moving in along that route. And we
hope that high-street retail in Gdansk will
improve, accelerated somehow by Forum
Gdansk.”
The other major delivery, scheduled for
2016, is the 34,000 sqm Galeria Metropo-
lia centre in Gdansk’s Wrzeszcze district,
known as the second city centre, and close
to the city’s dominant scheme, Galeria Bal-
tycka. Despite the two centres’ proximity,
however, Cushman and Wakefi eld’s Patryc-
ja Dzikowska does not see a potential clash.
“It is a diff erent scheme in terms of pro-
fi le and positioning,” she said. “At Baltycka,
there is no space to introduce new retailers
of larger size or leisure amenities. Metropo-
lia is a big, mixed-use revitalisation project
composed of a hotel, conference centre,
spa, high-class residential and retail includ-
ing – leisure, cinema and children’s enter-
tainment.”
Galeria Metropolia will also have its own
dedicated SKM station and will consist of
several elements including a 125-room
hotel, leisure and entertainment incorpo-
rating a seven-screen Helios cinema. Like
Forum Gdansk, the project also has a revi-
talisation component in the form of reju-
venating a landmark old brewery building
which will feature 740 high-end residential
units. The Metropolia investment foresees
a rich entertainment and leisure off er in-
cluding a concert hall for 1,200 people, mi-
cro-brewery, restaurants, cafes and public
meeting spaces. Developed by BP Gorski,
Galeria Metropolia is due to open in the
fi rst half of 2016.
In terms of density, Tri-City has over 500
sqm GLA per 1,000 inhabitants, well above
the national average. And with around
660,000 sqm of modern retail space in
the three cities, a short-term pipeline of
around 110,000 sqm is sure to have an im-
pact. But despite the total stock increasing
by more than 15 percent over the next two
years, the game is not over for new retail
says Beata Kokeli, head of retail depart-
ment at CBRE.
“There is still a lot of potential because
Tri-City itself is entering a phase of its de-
velopment when are lot of BPOs opening
up,” Beata Kokeli said. “There is huge inter-
est from foreign companies interested in
setting up their BPOs. Lots of young peo-
ple are studying at Tri-City universities.
They have stopped leaving and now peo-
ple are moving into the area. A lot of offi ce
space is being built and Tri-City is expect-
ing a boom.”
The area is also becoming a local trans-
port hub for the north. Gdansk airport
now serves destinations all across Europe,
bringing foreign money to the cities. Many
residential developments are being built in
Gdansk while Sopot is an increasingly at-
tractive location for second homes. The in-
dustrial market is also growing, particularly
regarding IT companies, so young people
have stopped leaving and others are start-
ing moving in.
“Internal demand is building huge
spending power,” said Beata Kokeli. “Tri-
City universities are attracting more stu-
dents from all around the country. So
retailers are keen to have units here. The
other source of customers is tourists.”
Tourism has long been a mainstay for Tri-
City retail and regular high volumes of for-
eign consumer-tourists bolster the market
considerably. People come for shopping
weekends from Scandinavia, Russia, Ger-
many and beyond.
“About 1.5 million foreign visitors a year
don’t limit themselves to the usual sightse-
er’s tourist shopping but come for fashion,
household goods, cosmetics, perfumes,
groceries, everything,” Beata Kokeli said.
“Property managers give us feedback that
Russians and Scandinavians come, and
they buy. Internal demand is booming and
Tri-City is a region with a lot of potential.”
But for now, analysts agree, there is no
more room for big shopping centres. The
next few years will see development lim-
ited to in-fi lling through mixed-use and
high-street space and some smaller retail-
park-type schemes for local residents. But
with its port growing, BPO booming and
ambitious long-term regeneration plans,
for Gdansk and the Tri-City their best years
are still ahead.
Forum Gdansk
Galeria Metropolia
Retail Guide 2015 41
Tri-City Overview
42 Retail Guide 201542 Retail Guide 2015
Poland Retail
Commercial potential of PKP S.A. real estatePKP S.A. is one of the largest land-
owners of real estate in Poland. The
company manages more than 2,000
train stations, and has approximately
100,000 real estate parcels. For many
years the potential of railway properties
has been untapped. More than three
years ago PKP S.A. radically changed
its approach to managing its property,
and is pursuing a major investment
program.
The main task of the company is fo-
cused around a program of mod-
ernizing its railway stations. This
includes objects throughout the country.
The total number of investment in railway
stations in the 2012-15 period was almost
90, and the value of the projects is one bil-
lion PLN. Polish railway stations are now
becoming modern and functional, off ering
high quality passenger services. Thanks to
this investment, the stations are also creat-
ing attractive retail space for tenants.
Using the potential of land from former
railway sites PKP S.A. is cooperating with
private investors. The projects in this for-
mula are performed by Xcity Investment –
a development company in the PKP Group.
With this type of investment new urban
spaces are created, with offi ce, residential,
retail and hotel buildings. Often within
these projects new railway stations are cre-
ated as elements of integrated traffi c hubs.
Thanks to these development projects, im-
plemented by PKP, a new urban fabric has
been created as well as areas attractive to
local communities and tenants of commer-
cial space.
Commercialization of railway stations
PKP S.A. is achieving better and better
results in managing its railway stations.
The average level of occupancy in seven
key stations is nearly 95 percent, while
three years ago it was only 43 percent. Fur-
ther, well-known brands are now choosing
to rent space in PKP S.A. buildings, for ex-
ample, McDonald’s, Starbucks and Empik.
PKP S.A. is also keen to work with smaller
companies like local bakeries or cafes.
Warszawa Centralna
One of the main railway stations in Po-
land. Currently 95 percent leased. PKP
S.A. has further increased the potential of
this project by implementing a complete
renovation project, which will increase the
number of available premises for tenants,
and the entire commercial area from 7,000
to 8,600 sqm.
Krakow Główny
The fi rst railway station in Poland en-
tirely located beneath the platforms. It has
already won two awards at the CEE Retail
Awards. The location in the very center of
Krakow, and integration with other means
of transport within the traffi c hub, enhance
the commercial potential of the entire ob-
ject. Currently it is 94 percent leased. The
building provides a total of 4,100 sqm of
commercial space.
Wrocław Główny
The station was modernized in 2012. The
commercial potential is aided by numerous
cultural events organized by PKP S.A., such
as exhibitions, urban games and book fairs.
The commercial premises at Wrocław
Główny station are 95 percent leased and
the entire commercial area is 6,700 sqm.
Gdynia Główna
This historic train station was modern-
ized in 2012. Its location in one of the most
touristic areas of Poland means that its po-
tential for increased infl ow of passengers,
and a greater number of customers, is very
attractive for tenants. Currently, the station
in Gdynia is 93 percent leased. In total it
has 1,800 sqm of GLA.
Development projects
The real estate belonging to PKP S.A.
is managed by Xcity Investment. The
company is implementing projects un-
der a portfolio, the total value of which is
estimated at 8.84 billion EUR. The largest
investments include, among others, con-
struction of a new Warszawa Zachodnia
railway station, the development of land
in Gdynia Międzytorze and Bosacka Street
in Krakow.
Currently Xcity Investment is imple-
menting seven projects and is conducting
further negotiations on three consecutive
projects. At the end of October 2015 the
company started looking for potential in-
vestment partners on another 15 develop-
ment projects throughout the country.
Aleje Jerozolimskie 140
The project is being developed in War-
saw, close to the Warszawa Zachodnia
railway station. The planned building will
have offi ce and commercial functions. The
expected commercial space will be around
60,000 sqm in total.
Bielsko-Biała
The project involves the construction
of a shopping centre in the central part of
the city, very close to the train station. The
expected commercial area will be around
2,000 sqm.
SPONSORED ARTICLE
Kraków Główny
the railway and bus stations. The expected commercial area will be
around 3,600 sqm.
Katowice,
plac Oddziałów Młodzieży Powstańczej
The project will be in the city centre, close to Galeria Katowice and
the bus and train stations. The planned building is to serve as offi ce
and commercial. The project also envisages the creation of a new rail-
way station. The future commercial space will be around 4,000 sqm
total.
Kłodzko
The project involves the construction of an integrated transport
hub and shopping centre. The investment will be carried out in the
central part of the city. The expected commercial area will be of
around 4,000 sqm.
Koło
The project involves the construction of a shopping centre in the
northern part of the city. In close proximity to the investment is the
train station. The expected commercial area will be around 6,600
sqm.
Koszalin
The project involves the construction of a shopping centre in the
central part of the city, close to the train and bus stations. The ex-
pected commercial area will be about 900 sqm.
Kutno
The project involves the construction of a shopping centre in the
south-western part of the city, close to the train station. The expected
commercial area will be around 2,700 sqm.
Łowicz
The project involves the construction of a shopping centre in the
central part of the city, not far from the Old Town, and the train and
bus stations. The expected commercial area will be around 9,500 sqm.
Oleśnica
The project involves the construction of a shopping centre in the
southern part of the city, a short distance from the train station. The
expected commercial area will be around 11,600 sqm.
Skarżysko-Kamienna
The project involves the construction of a shopping centre in the
eastern part of the city, not far from the city centre. The expected
commercial area will be about 6,200 sqm.
Szczęśliwicka 62
The project is being implemented in the western part of the Ocho-
ta district in Warsaw. The planned building is to serve as a residential,
shopping and service space. The future residential and commercial
area is estimated at around 18,800 sqm.
Warszawa Włochy
The project will be in the centre of Warsaw’s Włochy district. The
planned building is to serve as offi ce and commercial. The project
also envisages the construction of a new railway station on the War-
szawa Włochy station. The expected commercial space will be around
7,000 sqm.
Poland Retail
Katowice, plac Oddziałów Młodzieży Powstańczej
Retail Guide 2015 43
Centralna Park
A project in the centre of Warsaw, at the junction of Al. Jana
Pawła II and Al. Jerozolimskie. The building will have offi ce,
commercial and hotel functions. The future commercial area is
estimated at around 100,000 sqm.
Chorzów
The project involves the construction of retail and hotel com-
plex at Towarowa Street, near the Chorzow Miasto train station.
The expected commercial area will be around 21,700 sqm.
Elbląg
The project involves the construction of a shopping centre
in the southern part of the city, at Grunwaldzka Street, near
SPONSORED ARTICLE
Warszawa, Centralna Park
Koszalin
44 Retail Guide 2015
Poland Warsaw
Galeria Wilanow
Winston Norman
Construction of new retail in Warsaw gaining momentum
Total modern shopping centre stock in
the Polish capital currently amounts to
around to 1.4 million sqm, located within
42 schemes. At present there is 127,000
sqm of new space under construction
within seven pipeline projects. However,
30 percent of this new stock consists of
extensions of existing shopping centres.
Despite the signifi cant amount of stock,
the retail space density ratio, according
to Colliers International’s publication
“Shopping centres in Warsaw H1 2015,”
is at an average level of 546 sqm per
1,000 inhabitants, and vacancy stands
at a modest 1.5 percent, well below the
European average.
Among all the planned investments,
the construction of which is due
to take place in the coming years,
worthy of mention are: Galeria Polnocna
(64,000 sqm GLA), Galeria Wilanow (61,000
sqm GLA), Galeria Piaseczno (44,300 sqm
GLA), as well the multifunctional complex-
es of Art Norblin (24,000 sqm GLA for re-
tail/service) and Centrum Praskie Koneser
(21,000 sqm GLA for retail/service).
“The Warsaw agglomeration represents
the largest Polish retail market in terms
of supply, accommodating over 1.11 mil-
lion sqm of shopping centre space,” com-
mented Anna Bartoszewicz-Wnuk, Head
of Research and Consulting at JLL Poland.
“In addition, the spending power of its
inhabitants exceeds the national average
by 68 percent. However, with respect to
shopping centre density, Warsaw is one
of the least saturated markets in Poland
and continues to lag behind other major
agglomerations such as Wroclaw, Poznan,
Tri-City, Lodz, and Krakow. So it comes as
no surprise that demand is high for new
retail projects in the capital, especially in
dynamically developing residential areas.”
Currently Warsaw houses 14 shopping
centres that off er over 100 stores each.
The centres with the most stores and food
outlets are Galeria Mokotow (270), Arkadia
(240) and Zlote Tarasy (220). In total, over
3,560 stores operate in Warsaw shopping
centres. The largest tenant group is com-
posed of fashion and services. Also well-
represented are restaurants and cafes,
Poland Warsaw
Galeria Polnocna
Anna Bartoszewicz-Wnuk –
Head of Research and Consulting, JLL
The Warsaw Agglomeration represents the
largest Polish retail market in terms of sup-
ply, accommodating over 1.11 million sqm
of shopping centre space. In addition, the
spending power of its inhabitants exceeds
the national average by 68 percent. How-
ever, with respect to shopping centre density
per 1,000 inhabitants, Warsaw with a ratio of
437 sq m is one of the least saturated mar-
kets in Poland and continues to lag behind
other major agglomerations such as Wro-
claw, Poznan, Tri-City, Lodz, and Krakow. So it
comes as no surprise that demand is high for
new retail projects in the capital, especially in
dynamically developing residential areas.
gins from the health & beauty sector, Su-
perdry, Kiabi and Courir from the fashion
sector, Dsquared2 Kids and Jacadi Paris
from the children & maternity sector. Good
quality shopping centres attract unwaver-
ing interest from tenants,” said Katarzyna
Michnikowska, Senior Analyst, Research
and Consultancy Services at Colliers Inter-
national.
According to JLL, the lowest shopping
centre density within the Warsaw agglom-
eration is in Rembertow, Wawer, Wesola,
Wilanow, Bielany, Zoliborz and Bialoleka.
Developers, attracted by spending power,
a growing number of residents and low
vacancy rates, are launching several new
retail projects. Around 108,000 sqm of re-
tail space was under construction as of the
end of H1 2015. The biggest investment
within the agglomeration was Fabryka
Wolomin, while in Warsaw itself it was the
extension of Wola Park.
Additionally, GTC has recently obtained
a building permit for Galeria Polnocna
(64,000 sqm of GLA). The cornerstone of
this fl agship investment was laid in Sep-
tember. Moreover, construction work on
the historic CEDET department store has
just begun. Therefore, space on Warsaw’s
retail market expects major changes over
the next few years with various types of re-
tail schemes entering the market.
“The major retail development trends
noted in Warsaw include refurbishments,
redevelopments and extensions of existing
retail assets, expanding high street retail-
ing, the revitalization and transformation
of historical sites into modern schemes, an
increasing number of schemes combining
offi ce and retail functions as well as the
development of railway stations areas,”
commented Anna Wysocka, Head of Retail
Agency at JLL Poland.
A few other market trends can be ob-
served, designating the direction of
changes, these are, the further extensions
and phases of well-performing schemes
in order to retain clients by ensuring they
are provided with a wider choice. And the
owners of older schemes are increasingly
deciding to enlarge their projects by add-
ing further phases in order to refresh them.
Current examples of pipeline extensions
and phases include Centrum Janki, Wola
Park, and Promenada. An increasing num-
ber of planned mixed-use (offi ce and retail)
schemes in good locations is noticeable,
with Smyk and Centrum Marszalkowska
(former Sezam store) being the most
prominent examples. This is forecast to
give a substantial boost to the develop-
ment of high-street retail.
High-street retail in Warsaw is still await-
ing infrastructural changes. The comple-
tion of the second metro line’s central junc-
tion is scheduled for the end of 2015 and is
likely to give a considerable boost to the
high street retail sector.
Available retail stock has been well-
absorbed by the Warsaw market and is re-
fl ected in one of the lowest vacancy rates
countrywide.
shoes, clothing & leather goods, health &
beauty and homeware.
“Warsaw is a popular place for interna-
tional chains to debut in Poland. Recently,
there have been some new openings: Ori-
Retail Guide 2015 45
46 Retail Guide 2015
the centres within a particular city. Just as
each retail project can be subject to analy-
sis, so one can also analyse the attractive-
ness of entire cities for shoppers in terms
of the range of brands on off er and posi-
tioning.”
The future pipeline is polarised towards
small, convenience or mixed-use projects
from one side, and large-scale schemes
on the other. The fi rst group includes Hop
Stop in the Falenica district (7,000 sqm),
Ghelamco’s recently opened Vogla Park
in the Wilanow district (11,000 sqm) and
Ferio Wawer (12,000 sqm). Larger pipeline
schemes to be completed in 2015/2016
are: Fabryka Wolomin (31,000 sqm) as well
as Galeria Wilanow and Galeria Bialoleka
off ering 60,000 sqm of retail space each.
According to JLL, monthly prime rents
per sqm in the leading shopping centres
are €95-€110, in retail parks €8-€9, while
on main high streets they are around
€80-€90.
Poland Warsaw
“Several new domestic and interna-
tional brands have recently opened on
the Warsaw market, including two French
brands – Kiabi in Blue City and Courir in
Galeria Mokotow, the British Superdry in
Zlote Tarasy and the Polish brand Scal-
lini in Klif. Furthermore, popular US bak-
ery fi rm Dunkin’ Donuts has announced
that it will open 44 cafes across Poland
and has selected Warsaw as a bridgehead
for its expansion into Poland,” said Anna
Wysocka.
The city’s three large shopping centres
(Galeria Mokotow, Arkadia and Zlote Tara-
sy) have the widest and most unique range
of brands in Warsaw. They are also charac-
terised by fairly similar market positioning,
although Galeria Mokotow’s positioning
is markedly higher. Interestingly, three
other assets (Blue City, Atrium Promenada
and Klif ) feature a similar attractiveness in
terms of the brands on off er, although their
market positioning are somewhat diff er-
ent. The remaining projects in Warsaw can
be described as comparable, both in terms
of market segmentation and uniqueness
of the range of brands on off er.
Anna Wysocka said: “Centres diff er in
terms of location, size, age, market posi-
tioning, and capture power, with a key dif-
ferentiator for a particular asset being its
tenant mix. Therefore as well as location,
a combination of such attributes as the
number of popular brands trading, their
market positioning against the catchment
area profi le, and the uniqueness of what it
off ers on a particular market make a retail
centre perform successfully. The retail pro-
fi le of a city is the sum of the off ers from all
Ghelamco’s recently opened Plac Vogla
Agnieszka Kolat –
National Director, Retail Investment CEE, JLL
Development in Poland’s retail market con-
tinues apace. In total, 708,000 sqm of retail
space is under construction across Poland,
with shopping centres accounting for
675,000 sqm. The biggest schemes under
development are Posnania (100,000 sqm) in
Poznan, Wroclavia (64,000 sqm) in Wroclaw
and Forum Gdansk (62,000 sqm). In Septem-
ber 2015, GTC laid the cornerstone for Galeria
Polnocna (64,000 sqm), one of its fl agship
projects in Warsaw. Importantly, redevelop-
ments and refurbishments of existing retail
schemes still constitute an important trend
on the market, resulting from growing com-
petition and changing customer expecta-
tions. Poland is attractive for international
retailers with the biggest fashion debut in
2015 being Superdry. Vacancy rates in the
major agglomerations range between 1.6
percent and 4 percent, with the exception of
Wroclaw (4.6 percent). In Warsaw, prime rents,
which refer to units of 100 sqm earmarked for
fashion & accessories and located in the best-
performing assets, have seen an increase and
now stand at €120 per sqm a month.
Brendon O’Reilly –
Managing Director, FASHION HOUSE Group
The CEE outlet market is rapidly developing
in terms of the number of outlets, sales and
footfall growth. After a short break in 2014 for
establishing the taken positions, major play-
ers are ready to take another great leap for-
ward. The original lack of understanding for
the outlet centres concept and its strengths is
over now and funds are fi nally fi nding outlets
as a core asset with a great ROI perspectives.
Several recent transactions across Europe
confi rm the change. What is more, develop-
ers who can aff ord to fi nance new construc-
tions from their own equity are now ready to
invest as well. Moving forward, the next big
challenge for outlets is the merge of offl ine
and online sales. Recent studies by the IDC
shows that customers who buy both online
and in-store have approximately 30 percent
higher lifetime value in comparison to those
using only one channel to shop. Retailers are
eager to serve them on every step of their
journey.
Polish State Railways properties for rent
Contact us: [email protected]
Offers available at: � www.pkpsa.pl/nieruchomosci
� premises at railway stationsand other attractive locations
� retail, offi ces, warehouses
[PKP067]_Reklama_komercjalizacja_do_Retail_Guide_1.indd 1 09/11/15 10:59
48 Retail Guide 2015
Poland Investment
Focus Park in Rybnik
Winston Norman
Good perspectives remain for retail investment
Poland retains its attractiveness to
investors, with a diverse profi le of
transactions being closed, and a strong
pipeline of deals expecting to close in Q4.
Retail properties are the most attractive
asset class as most investors expect to
increase their retail allocation in the
coming 12 months.
“Polish properties remain at the
top of the list for investors in
Central and Eastern Europe. Po-
land is the largest investment market in
this part of Europe,” said Piotr Kaszynski,
Partner, Head of Capital Markets in Poland,
Cushman & Wakefi eld. “It continues to at-
tract growing capital fl ows and a broaden-
ing audience of investors benefi ting from
relatively easy access to capital, strong
macroeconomic fundamentals and com-
petitive yields.”
According to JLL, the year-to-date retail
investment volume stands at over €660
million, and has already exceeded 2014’s
total of €570 million. “There are several
other retail investment transactions which
have preliminary sale agreements signed
with closing scheduled by the end of 2015,”
commented Agnieszka Kolat, National Di-
rector, Retail Investment CEE at JLL. “There-
fore, if these deals close as planned, it is
highly likely that this year the total volume
of retail transactions will exceed the €1.3
billion registered in the market in 2013.”
The most signifi cant retail investment
transaction concluded in Q3, was Foncièrie
Euris and Rallye selling Centrum Riviera
in Gdynia to Union Investment for about
€291-300 million.
“The sale of Riviera in Gdynia illustrates
the strong interest that investors continue
to have in core retail properties located
in Poland’s major agglomerations,” com-
mented Agata Sekula, International Direc-
tor, Head of Retail Investment CEE at JLL.
Neil Gregory-Eaves, International Direc-
tor at Colliers, added: “Demand for region-
ally dominant centres in Poland is growing
and now attracting the top investors glob-
ally. Investor interest in Riviera originated
from across the EMEA and Asia and the
50 Retail Guide 2015
Poland Investment
The Sarni Stok shopping centre opened in 2001
fi erce competition for the property was
refl ected in pricing, a new benchmark in
Poland.”
Poland is likely to benefi t from increased
demand from non-European investors,
who increasingly look for opportunities
beyond Europe’s core markets of UK, Ger-
many and France. Investors are expected
to continue to shift their focus to regional
markets in search of opportunities and en-
hanced returns.
Notable deals from H1 include: Sarni
Stok in Bielsko Biala and Focus Park Rybnik
acquired by Union Investment, and Solaris
Centre in Opole purchased by Rockcastle.
All of these transactions were medium
sized deals ranging between €50 and €100
million. Total investment volume for H1
2015 amounted to about €285 million.
The Sarni Stok shopping centre opened
in 2001, and is spread over an area of some
31,243 sqm. The centre underwent an ex-
tension and refurbishment in 2012. CBRE
Property Fund Central Europe owned the
property from 2006.
“Sarni Stok is an established shopping
centre with a diverse tenant mix located
in a metropolitan area with above average
purchasing power, making it an excellent
fi t for our thematic fund,” said Dr. Christoph
Schumacher, a member of the manage-
ment team at Union Investment.
Martin Sabelko, a Fund Manager and
CEO of CBRE Global Investors Central and
Eastern Europe, commented on the trans-
action: “This disposal is in line with our
promise and our commitment to the Fund
Business Plan presented to our investors.
This transaction also highlights our increas-
ing transactional activity in the CEE region.”
Aviva Investors sold Focus Park shop-
ping centre in Rybnik to Union Investment.
Agnieszka Kolat, National Director, Retail
Investment CEE, commented: “This trans-
action clearly illustrates the growth in re-
tail investor activity. It also further proves
the interest among key foreign investors in
shopping centres that are located outside
major Polish agglomerations, boasting
a strong position on its particular market,
a wide catchment area, high footfall and
loyal customer base.”
Solaris is an 18,000 sqm GLA shopping
centre located in the city of Opole. It is
a modern third-generation shopping cen-
tre, which opened in 2009 encompassing
three main retail levels.
Spiro Noussis, Chief Executive Offi cer at
Rockcastle Global Real Estate, said: “The
Solaris transaction is our fi rst acquisition of
an existing retail centre in Poland and es-
tablishes our presence in the market. It is
the fi rst step towards achieving our strate-
gic objective of building a signifi cant retail
shopping centre portfolio and operational
presence in the country.”
According to Noussis, Rockcastle has
earmarked €750 million of equity for the
purpose of both acquisitions and develop-
ments in Poland.
According to JLL, the total volume of re-
tail investment deals concluded in Poland
in Q2 2015 was in the region of €110 mil-
lion. Transactions included TH Real Estate’s
purchase of a 50 percent interest in Nein-
ver’s assets in Factory Annopol in Warsaw,
Futura Park in Krakow with the adjacent
Factory Krakow outlet; as well as smaller
deals.
The assets acquired form part of a stra-
tegic joint venture between Neinver and
TIAA-CREF to create an outlet platform in
Europe. TH Real Estate acts as investment
advisor to the vehicle, while Neinver pro-
vides specialised asset management and
operational services to the assets. Both
partners have aspirations to build a signifi -
cant investment platform over time.
Phil McAndrews, Senior Managing Di-
rector and Chief Investment Offi cer of
TIAA-CREF Global Real Estate said: “We
have a strong interest in European shop-
ping centres as we believe the continent is
under-retailed, and the outlet mall sector
is performing particularly well. Poland is
an interesting market as it is highly literate,
has positive employment prospects and
strong economic growth.”
Jamie Acheson, Investment Manager,
European Outlet Malls at TH Real Estate
said: “The acquisitions of Annopol and Kra-
kow represent our fi rst investment in the
Retail Guide 2015 51
Polish market, and form the next step of
our European joint venture with Neinver.
The retail sector in Poland off ers excel-
lent prospects for growth and we believe
that the outlet mall market is well-placed
to capture this growth as the market ma-
tures.”
Emphasising the diversity of product
and competition on the market was the ac-
quisition of Mlyn Retail Park in Wroclaw by
MITISKA REIM on behalf of its specialist real
estate fund First Retail International (FRI).
This acquisition was coordinated and ex-
ecuted by Peppercorn Properties, MITISKA
REIM’s country partner for Poland.
Mlyn Retail Park opened in December
2008 and was Helical’s fi rst project in Po-
land. “The Mlyn Retail Park format has been
proven to be very successful”, said Jona-
than Tinker, Managing Director of Helical
Poland. “We plan now to focus on further
development of the Mlyn brand with an
exciting programme of new schemes
scheduled for 2015 and 2016.”
David Tejml, Head of CEE at MITISKA
REIM, added: “This acquisition is consist-
ent with our fund’s investment criteria
and demonstrates that, despite a com-
Poland Investment
petitive transaction environment, we can,
together with our local country partner
Peppercorn Properties, continue to source
attractive deals in the retail park niche
with a view of delivering strong income
returns and asset management upside. It
is a valuable addition to our fund which is
regionally diversifi ed across Europe in the
retail park niche.”
Currently, there are numerous trans-
actions with negotiations in advanced
stages. BlackRock Real Estate has sold
two shopping centres in southern Po-
land, Karolinka in Opole and Pogoria in
Dabrowa Gornicza, to RockCastle. Both
shopping centres were developed in 2008
by Mayland Real Estate and BlackRock ac-
quired them in 2009.
Michal Cwiklinski, Managing Direc-
tor, Head of Investment at Savills Poland,
commented: “Regional shopping centres,
in medium-sized cities in Poland, are at-
tractive investment targets for investors.
We expect signifi cantly more activity from
local and international buyers in the retail
sector in 2015, focusing primarily on domi-
nant shopping centres with good trading
histories.”
JLL puts yields for prime retail schemes
at around 5.5 percent.
Agata Sekula summarized: “After sub-
dued retail investor activity in 2014 we
have witnessed increased activity in the
market this year. Given the number of
other retail transactions that have already
been signed, or are at very advanced stage
of negotiations, we believe that overall re-
tail investment volumes in 2015 will equal
or exceed 2013 level of circa €1.3 billion.
We are of the opinion that this positive in-
vestment trend will continue in 2016.”
Solaris Center
52 Retail Guide 2015
Hungar y Overview
Fashion Street in central Budapest
Limited space to meet retail demand Gary J. Morrell
Despite rising retail spending there
has been no new Hungarian shopping
centre developments delivered in
recent years and with no projects
under construction the next shopping
centre deliveries will not be until at
least 2017. With economic concerns
causing uncertainty among developers,
investors and lenders, pipeline projects
have not gone ahead.
The Budapest retail market could be
regarded as challenging as leading
retailers entering the market re-
quire large units in the best shopping cen-
tres where there are often waiting lists for
tenants. Centre owners have been under-
taking asset management of their centres,
including refurbishments and upgrading
the tenant mix. Developers in partnership
with local authorities have also been im-
proving and developing the infrastructure
of major high streets in the centre of Bu-
dapest.
New retail supply has reached historic
lows in recent years, according to CBRE.
Since 2012 less than 50,000 sqm of new
retail space has been delivered in Hun-
gary. Total modern retail stock in Hungary
– including retail warehouses but not high
streets – amounts to 3.6 million sqm. Half
of this volume is concentrated in greater
Budapest, while 27 percent is located in
cities with populations of over 100,000.
“The pipeline for new shopping centre
space seems absolutely dry until 2018.
Contrary to this, there are several new
downtown developments in Budapest
that will boost high street supply and we
anticipate at least 10,000 sqm in new sup-
ply by 2018,” said CBRE.
JLL put total shopping centre stock in
Budapest at about 770,000 sqm in 25 as-
sets while the shopping centre density
stands at 444 sqm per 1,000 inhabitants.
Shopping centre stock for Hungary stands
at 1.360 million sqm compared to 138 sqm
per 1,000 inhabitants across Hungary.
Retail sales in Hungary grew by 6.1 per-
cent year-on-year for the fi rst half of 2015
– a clear acceleration compared to previ-
ous years, according to CBRE. Similarly
high levels were last seen in 2006. This re-
tail sales growth is in line with the general
trend in CEE and the average CEE growth
rate signifi cantly exceeds the EU-28 aver-
age at plus 2.8 percent.
Analysts consider the best perform-
ing Budapest shopping centres to be the
47,000 sqm Allee, the 44,000 sqm Mam-
mutt and the 31,500 sqm MOM centre in
Buda. In Pest the dominant centres are
the 66,000 sqm Arena Plaza, the 45,000
sqm WestEnd City Centre and 68,000 sqm
Arkad shopping centre. These have wait-
ing lists for tenants and therefore are able
to command the highest rents.
Several of these have been the subject
of investment transactions. In the last
deal Morgan Stanley Real Estate Investing
in partnership with the Hungarian devel-
oper and investor, WING and the Austrian
retail manager and investor, CC Real pur-
chased the 31,500 sqm MOM Park shop-
ping center.
Rental levels have increased across all
market segments this year, according to
CBRE. The largest increase was in Budapest
The German developer ECE is planning
the 50,000 sqm Arkad Acqincum. The last
Budapest delivery was the 20,000 sqm ex-
pansion and refurbishment by ECE of the
Arkad shopping centre, bringing the size
of the development to 68,000 sqm, and
making it the largest retail centre in Hun-
gary. When one of the pipeline projects
goes ahead remains to be seen.
Hungar y Overview
Arena Plaza in Budapest
high street retail units where typical rents
are now in the range of €60-100 per sqm
per month for a 200 sqm unit. Demand
for units in areas with a high tourist foot-
fall has also risen in some regional cities.
Prime Budapest shopping centre rents are
quoted at €50-80 per sqm per month, also
above last year’s level. The best shopping
centres in regional cities have experienced
a remarkable growth of up to 25 percent
year-on-year.
These fi gures do not seem to have been
dampened by the legislation stipulating
the Sunday closure of retail units of over
200 sqm introduced by the Hungarian gov-
ernment that came into eff ect in March.
However preliminary fi gures indicate that
sales fi gures have not been as negatively
aff ected as feared with consumers chang-
ing their shopping habits to fi t in with the
new opening hours.
Critics of the legislation argued that the
legislation would hit the income of shop-
ping centre operators and retailers. It is
argued that that for many people Sunday
is the only convenient day when they can
visit a shopping centre and if shopping
centres are open then people have the
choice of whether to visit a centre or not
– the argument goes. This is also seen as
a wider problem of ad hoc laws being in-
troduced by the government without con-
sultation with the relevant groups and cre-
ating perceived political uncertainty that
is discouraging investment into Hungary.
Proponents of the new legislation argue
that it protects the “sanctity of Sunday” as
a “family day”.
With regard to demand, CBRE has regis-
tered a growing number of new retailers
on the Hungarian market. Thirteen brands
have already entered or are scheduled to
enter the market this year as they target
prime high street locations and prime
shopping centres in Budapest. The city
has three major central high street retail
areas: Fashion Street has been developed
by Immobilia and provides 8,000 sqm of
retail space and restaurants, Budapest’s
traditional high street Vaci utca has been
renovated connecting its southern and
northern parts and Andrassy ut, Buda-
pest’s main historical boulevard, is attract-
ing luxury brands in addition to restau-
rants and bars.
Delivery of the three major pipeline
projects remains uncertain. “The market
has not justifi ed the development of new
shopping centres and needs a continued
rise in demand for construction to com-
mence,” said Viktoria Szabo, Head of Retail
at Cushman & Wakefi eld. “However, we
are now moving in the right direction for
new development in the next two to three
years. The pipeline projects are in good
locations and the question is whether the
developers can source the required num-
ber of anchor tenants. These need to be
the right tenants that are not located in
competing centres.”
The planned 44,000 sqm Etele City
Center by Futureal will be located next to
the Budapest One business park adjacent
to the terminus of the recently completed
Metro 4 line on the western edge of Buda-
pest. The development project is planned
to become a business and leisure hub that
will include retail and service elements ad-
jacent to offi ce centres. ECE has agreed to
manage the project.
Another pipeline project is the 37,000
sqm Mundo shopping centre in the Zu-
glo district of Pest by the Polish developer,
Echo Investment.
Viktória Szabó – Head of Retail,
Cushman & Wakefi eld Hungary
We are now moving in the right direction for
new development in the next one to three
years. The pipeline projects are in good lo-
cations and the question is whether the
developers can conclude preleases with the
required number of anchor tenants and ten-
ants for mid-sized units. These need to be
new tenants and formats for the Hungarian
market that are not located in competing
centres. With the lack of new development,
developers are having to accommodate new
tenants by relocating existing tenants, once
leases contracts have expired. With regard
to the quality of existing retail stock, centre
owners are regularly refurbishing and up-
grading existing stock.
Retail Guide 2015 53
54 Retail Guide 2015
Czech Rep. Overview
Limited supply prevents overheating
Gary J. Morrell
Although retail delivery has been
limited, new supply is expected to
resume in 2016-2017, with the delivery
of schemes under construction. New
retailers are competing for space in
the best-performing shopping centres,
and high-street locations in Prague,
although there are limited locations for
new development.
Shopping centre stock in the Czech
Republic stood at 2.65 million sqm
at the end of the fi rst half of 2015, ac-
cording to JLL. Around 97,000 sqm is under
construction.
According to CBRE, the Czech Republic
has the second highest density of shop-
ping centres per 1,000 inhabitants in CEE
after Poland. The average shopping centre
quantity in regional cities is 690 sqm per
1,000 inhabitants, although this varies.
With this relatively high shopping centre
stock, new development has fallen and
only one shopping centre was delivered
this year. However, new supply is expected
to resume in 2016-2017 with the delivery
of schemes currently under construction.
The largest new scheme is the 22,600
sqm Aupark Hradec Kralove in east Bohe-
mia by HB Reavis, which is due to open in
Palladium shopping centre in central Prague
the fourth quarter of 2016. HB Reavis has
been granted construction permits, and
building is set to commence by the end
of the year. The smaller 8,000 sqm Nova
Palmovka in Prague is also expected to be
completed in 2016.
In Prague the major pipeline project is
the 35,000 sqm Chodov shopping centre
extension in Prague 4 by Unibail-Rodamco
that is expected to be delivered in 2017.
This will increase the GLA of the complex
to a massive 100,000 sqm and boost the lei-
sure appeal, according to Unibail-Rodamco.
“We see the extension of Centrum Cho-
dov in the long-term as one of our major
Czech Rep. Overview
Retail Guide 2015 55
Palladium centre interior investment plans in Central Europe. The project aims to provide customers
with an alternative to shopping and leisure centres in the centre of Prague,”
said Amaud Burlin, Managing Director of Unibail-Rodamco Central Europe.
“While there is enough retail supply in the regional cities, the situation in
Prague is diff erent,” said Tomas Soukup, Head of Retail at JLL in the Czech
Republic. “The demand in Prague is mainly for prime shopping centres and
high streets, which are rather limited as there is not much potential for new
developments. This means that there is a growing demand for secondary lo-
cations. One of the few examples of new supply is the extension of Chodov
shopping centre, which is currently under construction. Other development
potential includes a reconstruction of the Cross in the city centre between Na
Prikope and Wenceslas Square. The development site was recently acquired
by Crestyl from Ballymore.”
Tomas Soukup added that in terms of traditional shopping centres the
market is mature and there are very few locations for new development.
“Potential can still be seen in retail parks, which are very successful in Czech
Republic and Slovakia, and currently expanding in cites of 10,000-15,000 in-
habitants. There is potential for new retail parks in cities of about 10,000 in-
habitants but in general, there are not many possibilities for shopping centre
development in the regions. The market in the Czech Republic is very mature
so the potential lies rather in refurbishing and repositioning of the existing
centres,” he commented.
Retail demand is seen as “high but selective”, focusing on prime shopping
centres and prime high streets. Franchising remains the preferred option as
opposed to direct market entry. Current prime shopping centre rents stand at
€100 per sqm per month, compared to €180 for high streets and €8 for retail
56 Retail Guide 2015
In another retail acquisition that refl ects
the strong investor demand for shopping
centres with a strong track record, Atrium
European Real Estate acquired a 75 per-
cent interest in the 38,000 sqm Arkady
Pankrac shopping centre in Prague from
Unibail/Rodamco for around €168 million.
This represented a 5.65 percent yield, ac-
cording to Cushman & Wakefi eld.
“The Czech Republic is a very saturated
and mature market with a higher density
of shopping centres per capita than West-
ern Europe. Combined with a stable econ-
omy, strong GDP growth and the fact that
prime shopping centres have always been
on the shopping list of investors this trans-
lates into fi erce competition for the best in
class products with proven performance.
Such schemes will always be limited and
scarce,” said Hana Kollmannova, Senior In-
vestment Analyst at JLL Czech.
CBRE expect to see a continuation in
the polarisation between prime and sec-
ondary centres. When entering the Czech
market retailers tend to seek prime loca-
tions in Prague. “On the one side there are
prime shopping centres and high street
locations in Prague that is still suff ering
from a lack of prime space forcing rent-
als upwards. On the other side there are
secondary projects represented mainly by
regional shopping centres which are fac-
ing saturation and a competitive environ-
ment.”
Czech Rep. Overview
Tomáš Soukup – Head of Retail,
JLL Czech Republic
New retail development without substan-
tial preleases have little chance of being
fi nanced. The banks are only willing to fi -
nance a project if at least 40-60 percent of it
is preleased. Banks have learnt from the past,
and now want to have the project under
control. With limited supply coming to the
market we do not see any danger of the retail
sector becoming overheated. In general, the
quality of new product in the Czech Repub-
lic is defi nitely comparable to standards in
both Central and Western Europe. There is of
course a variation in demand in the regions of
the Czech Republic.
parks, according to JLL. Demand for prime
high street units as well as high quality
shopping is strong, according to Cushman
& Wakefi eld, and therefore rents in the best
performing centres are expected to rise.
The best performing shopping centres
in Prague are regarded as Chodov, Novy
Smichov and Palladium. “The gap between
the prime, well-located and best-perform-
ing shopping centres and the other or sec-
ondary space is expected to widen,” said
Cushman & Wakefi eld.
A sign of success for Prague’s best shop-
ping centres was the acquisition of the
Palladium shopping centre, which was the
subject of the largest single investment
transaction in the fi rst half of the year in
CEE. The centre was purchased by Union
Invest from Hannover Leasing for €570
million. The lenders were Bayern LB and
Helaba. The Palladium shopping centre
opened in 2014 and consists of 41,000 sqm
of retail and 19,000 sqm of offi ce stock. The
development was built onto the façade of
a former military barracks and is a former
Habsburg era protected building. The cen-
tre is one of the largest retail complexes in
the central Prague and provides 200 retail
units in a pedestrianised zone.
“Successful centre management has de-
livered an attractive tenant and brand sec-
tor mix in the retail space combined with
good occupancy levels in the offi ce space,
which means that we can expect positive
long term cash fl ow and a high level of
income stability,” said Hennike Waldburg,
Head of Shopping Centre Investment
Management at Union Investment Real
estate.
Na Prikope shopping street in central Prague
58 Retail Guide 2015
Slovakia Overview
City Arena in Trnava
Retail development in regional cities
Gary J. Morrell
Slovakia is now attracting such
established retail developers as Multi
Development, Penta Investments and
J&T Real Estate. However, shopping
centre development in the country
has been falling since 2010, and retail
stock is relatively high given its size,
with a population of 5.4 million. Total
shopping stock in Slovakia has now
surpassed 1.5 million sqm, more than
a third of which is located in Bratislava,
according to JLL. However, on the
demand side, incoming retailers are
still experiencing diffi culty in sourcing
quality shopping centre and high street
space in Bratislava.
Bratislava now has a shopping centre
density of 1,187 sqm per 1,000 in-
habitants. Rents are put at €50-85 for
shopping centres compared to €20-45 for
high streets and €8-25 for retail parks.
“Shopping centre supply is quite high
in Bratislava and the major cities but for
tenants targeting good locations within
the best shopping centres there is usu-
ally a waiting period until this is available,”
said Cristina Dumitrache, Head of Retail at
Cushman & Wakefi eld Slovakia.
Although a number of quality shopping
centres have been delivered across Slova-
kia, high streets are is not well represented.
A major gap on the market is seen as the
lack of high streets locations which is pre-
venting the entrance of more upmarket
brands.
The last major Bratislava delivery was
the 54,000 sqm Bory Mall shopping centre
in 2014 by Penta Investments; the compa-
ny aims to create a “new city district” in the
western outskirts of Bratislava. The project
located in the outskirts of Bratislava was
designed by the Italian architect, Massim-
ilano Fuksas. A second phase of the €300
million development is planned to consist
of offi ce, service and residential space. The
project has been fi nanced by a consortium
of UniCredit, VUB, CSOB and Hypo-Bank.
Following the completion of this cen-
tre, Bratislava is not regarded as off ering
signifi cant shopping centre development
potential. The three highest performing
centres are generally regarded as Eurovea,
Aupark and Avion. Further, in each region-
al city there is at least one high perform-
In Presov J&T Real Estate are planning to
develop the 22,000 sqm Eperia shopping
centre consisting of 95 units. According to
the development plans, the fi rst phase will
be completed in two years and an addi-
tional 7,500 sqm of space will be added in
a second phase with stand-alone units in
a third phase. J&T describe Eperia as “a re-
gional concept based on fashion and will
compete with high street retailers.” The de-
velopment is also planned to off er sports
and leisure facilities.
J&T Real Estate has acquired the Eurovea
shopping centre and investors are said to
be looking at the Slovak market as retail is
increasingly popular with investors. A sig-
nifi cant deal outside of the capital was the
acquisition by the South African investor
NEPI of Aupark shopping centre in Kosice
in addition to the adjacent Aupark offi ce
Tower from HB Reavis. The €165 million
deal included the sale of a development
plot in the city centre. Yields are expected
to compress further this year and JLL put
current prime shopping centre yields at
6.75 percent.
“The newly delivered or refurbished
schemes are now of a similar quality to
Central and Western Europe. More eff ort
is being put into providing more environ-
mental friendly shopping centres with
modern facilities for customers,” conclud-
ed Cristina Dumitrache.
Forum Poprad by Multi Development
Christina Dumitrache – Head of Retail,
Cushman & Wakefi eld Slovakia
There are good schemes that have been
developed in the past few years but some
of them are not yet available on the invest-
ment market. This situation could change in
2016 and Slovakia could be more active from
a retail investment point of view. In 2015 the
banks started to be more fl exible in providing
fi nancing for new development and it looks
like this will be the line for the following year
too. Mostly this depends on whether you are
a developer with a good track-record.
Slovakia Overview
ing scheme. These are attracting investors
and centre owners are striving to up-grade
their developments.
Major recent deliveries have been in the
regions with the delivery of the 22,000
sqm Forum Poprad and the 23,000 sqm
City Arena Trnava; both regional schemes
are aspiring to dominate their respective
cities.
The €50 million Forum Poprad by the
retail developer Multi Development has
delivered 22,000 sqm of retail and leisure
space in the centre of Poprad in the Tatra
mountain region of Slovakia. The centre
has been constructed on a brownfi eld
site. Multi Development has developed
the project in a joint venture with Gerno
Holding, a leading construction company
in the Czech Republic. Multi is responsible
for the management of the centre. The
design concept was developed by Multi
Development’s in-house designer, TTDe-
sign and ArchDesign from the Czech Re-
public.
According to Multi Development, the
complex is 98 percent let to 100 brands
aimed at mid to high range consumers in
addition to restaurant and fi tness centres.
Benetton, Gaastra and Apple Store are all
new to the city. Poprad has a population
of 55,000 and Multi estimate a catchment
area of over 300,000 people. The city is also
a major tourist destination.
“Development in the current economic
situation is not easy, but when a new
scheme is a good project, occupiers are
interested and our persistence in this case
has paid off . Together with people who
demonstrated a great deal of patience and
tolerance over recent years, we have deliv-
ered a new project in a unique locality that
will be a place for meetings, shopping and
entertainment,” said Multi Development
on the project.
The other major regional delivery is the
€76 million City Arena Trnava by the retail
and entertainment developer, Euro Max in
conjunction with the City of Trnava. The
development consists of 110 stores in a
23,000 shopping centre and 5,000 sqm
of street retail adjacent to a new football
stadium with a capacity for 19,000 people
for the professional football team, Spartak
Trnava. According to research by the Euro
Max, 282,000 people live within a 30 min-
ute catchment area and Euro Max antici-
pate 19,000 visitors a day at the complex,
which is close to fully let. Euro Max have
now developed eight shopping centres
across Slovakia, and four of these have
been sold onto developers.
According to Cristina Dumitrache, one of
the largest cities in Slovakia, which is not
fully developed in terms of modern retail,
is Presov. Three new projects for the fol-
lowing two to three years are now planned
in the city. Although in general there are
other smaller regional cities which are cur-
rently are not covered in terms of modern
retail schemes.
However, certain cities have already
reached a high grade of saturation in terms
of sqm per 1,000 inhabitants. In this way
Bratislava, Poprad, Zilina and Nitra have
a higher saturation of retail space than
1,000 sqm per 1,000 inhabitants. There-
fore the potential developers targeting
these cities should be very cautions mak-
ing a decision to undertake a new retail
scheme. Although GDP growth for Slova-
kia is estimated at 2.6 percent there is high
inequality across the regions with regard
to income, unemployment and therefore
spending power.
Retail Guide 2015 59
60 Retail Guide 2015
Romania Overview
Positive retail fundamentals for Romania
Gary J. Morrell
The Romanian retail market is again
attracting developers and retailers with
economic growth and a strong rise
in consumption recorded for the fi rst
half of the year. Cushman & Wakefi eld
research indicates that retail sales rose
by 4.2 percent year-on-year for May. This
is seen as an incentive for retailers to
pursue more ambitious expansion plans
in both Bucharest and regional cities
such as Timisoara, Craiova and Brasov,
which can still support an increase in
shopping centre stock.
W ith limited supply shopping
centres with proven track re-
cords are the main destination
for new retail entrants. Romania was previ-
ously a major retail destination with its sev-
eral large cities and limited modern retail
provision, however, it was severely hit by
the economic downturn. Analysts in gen-
eral do not see oversupply as a possibility
(as occurred in the pre-economic crisis era)
as retail centres are now being developed
on a more cautious basis.
CBRE put total modern retail stock in
Romania at 3 million sqm out of which
shopping centre stock is 1.7 million sqm.
Bucharest has 670,000 sqm of shopping
centre stock that is set to increase by a fur-
ther 90,000 sqm by the end of 2016. There
are also plans for expansions or refurbish-
ments for existing schemes, according to
Luiza Moraru, Head of Retail & Asset Ser-
vices at CBRE Romania.
Retail stock in the greater Bucharest
area stands at 444 sqm per 1,000 inhabit-
ants, according to JLL. The latest delivery
in Bucharest is the fully let 70,000 sqm
Mega Mall by the Austrian developer Re-
al4you group and the South African in-
vestor/developer NEPI. This is the biggest
development to date by the investor and
developer and the company is arguably
the biggest investor in the Romania retail
sector having invested €165 million in
Park Lake centre in Bucharest
Bogdan Marcu – Head of Retail, DTZ Echinox
New modern retail schemes delivered in
Romania over the past few years have reg-
istered an increase in quality of the projects
as developers understand the need to de-
liver better products in order to be able to
compete with the existing schemes, as with
other projects that may arise, in the coming
years. They now put more attention into the
design of the project and the layout and ac-
cessibility for customers. Irrespective of if we
are talking about a small retail park or a large
shopping mall, the target customer profi le is
taken into account and the projects are tailor-
made in order to better serve the purpose.
Development fi nance is more widely avail-
able, from certain banks but not all of those
that have previously fi nanced property. There
is a healthy degree of scrutiny by the banks
over which projects are fi nanced and which
are not. Debt fi nance of less than €10 million
is more accessible, normally with these loans
being approved at a country level. There re-
mains some challenges for securing bank
fi nance for large projects. However, the mar-
ket is improving and we expect to see more
confi dence in the fi nance market into 2016.
62 Retail Guide 2015
with new schemes or refurbishments of
successful existing ones,” commented Lui-
za Moraru.
The retail investment market has been
dominated by NEPI and Globalworth Real
Estate in recent years with, for example, the
purchase by NEPI of the 38,000 sqm Prome-
nada Mall from Raiff eisen Evolution (RE) for
€148 million. The retail centre was opened
in late 2013 and is located in the Floreasca
business district of the city. Last year was a
record year for the local investment market
with a total of over €1.2 billion, with retail
properties accounting for around €500 mil-
lion. During the fi rst three quarters of 2015
retail has accounted for 37 percent of total
volume, according to CBRE.
“Big institutional investors are expected
to increase their local presence in the sec-
ond half of the year as improving market
fundamentals are lifting their expecta-
tions. Prime high street yields ended the
end of the fi rst half year at 9 percent, while
shopping centre yields were static at 7.75
percent. Prime retail park yields were sta-
ble at 8.75 percent,” said Cushman & Wake-
fi eld.
Romania Overview
Luiza Moraru – Head of Retail & Asset Services,
CBRE Romania
At the moment it is unlikely that the market
is in danger of becoming overheated as oc-
curred previously. Lessons from the past have
been learnt and the under-performance of
some schemes has not been forgotten. Still,
overheating might occur in cities like Tim-
isoara and Brasov where at least two new
schemes have been announced. The pipe-
line needs to be correlated to the local retail
and economic environment in order to avoid
failures. Development fi nance was diffi cult to
access mainly after the boom years when the
equity requirement reached over 60 percent.
Nowadays international banks are supportive
of retail schemes, on the consideration that
the schemes are integrated within the catch-
ment area.
Mega Mall. NEPI estimate a 10 percent an-
nual yield in the project and predict 50,000
daily visitors to the complex in the east of
Bucharest.
Another Bucharest project, the 70,000
sqm ParkLake by Sonae Sierra and Cae-
lum Development, is expected to be de-
livered in 2016. The €180 million project
is already over 85 percent pre-let with the
British fashion retailer Debenhams signing
a 5,000 sqm pre-lease.
Outside Bucharest NEPI is working on
a 20,000 sqm extension to its City Park Mall
in the coastal resort city of Constanta. In
addition in Timisoara in western Romania
NEPI is investing €78 million in a 70,000
sqm shopping centre.
With regard to the quality of new
product, Luiza Moraru argues that ma-
jor schemes opened during the past few
years like AFI Palace Ploiesti, Promenada
and Mega Mall in Bucharest and the Coresi
Shopping Resort in Brasov are of a similar
quality to shopping centres across Europe.
She describes these as “third generation
schemes with a large off er of shopping,
entertainment, leisure and food and bev-
erage.”
Finance is seen as increasingly available
for the right projects. AFI Europe signed
a major fi nancing agreement for €220 mil-
lion with a consortium of banks compris-
ing Deutsche Pfanbriefbank, Erste Group
Bank and Raiff eisen Bank for the refi nanc-
ing of the AFI Palace Cotroceni shopping
centre in Bucharest. The project has a leas-
able area of more than 80,000 sqm and is
visited by 52,000 customers per day, ac-
cording to AFI.
“We appreciate the consortium’s trust in
AFI Europe and in AFI Palace Cotroceni, for
granting such a signifi cant loan. However,
as the successful result shows, achieving fi -
nancing in large sums is possible in Roma-
nia if it is for a good project and an experi-
enced developer,” commented David Hay,
CEO of AFI Europe Romania on the deal.
The developer is also planning the AFI
Palace B.Noi, a 36,000 sqm retail centre
and 14,000 sqm offi ce building in Bucha-
rest. Outside the capital the developer is
planning the 32,000 sqm AFI Palace Arad,
and has signed an agreement to purchase
a 40,000 sqm plot in the centre of Brasov
for the development of a 45,000 sqm shop-
ping mall and 11,000 sqm offi ce project.
As many as 80 retailers have entered
Romania since 2013, representing a re-
tail area of over 30,000 sqm, according to
CBRE. In total these 80 new brands have
opened close to 170 new stores and are
planning to open at least 30 new stores in
the next 12 months. This record number of
new entries is seen as correlated to strong
macro-economic indicators such as an av-
erage annual GDP real growth in the ana-
lysed period of 3.3 percent. In addition to
the capital, one in three retailers will also
locate to regional cities, the most attractive
of which are seen as Constanta, Timisoara,
Brasov, Ploiesti, Iasi and Cluj Napoca.
The predominant business model re-
mains the franchisee operation with 65
percent of new brands opting for this
strategy and only one in three entering the
market directly. Retailers from Italy, the US
and France account for half of new brand
entries while retailers from Poland, Ger-
many and the UK opened up the highest
number of stores, according to CBRE.
“In terms of the type of retailers and
type of operation, the existing patterns
will mostly continue – fashion brands, fran-
chisees, and European names will lead the
expansion model in Romania. We expect
regional cities to attract more new brands,
as the off er of third generation centres,
highly attractive for retailers, will increase
AFI Palace Cotroceni
Romania Briefs
IKEA eyes strong expansion in Romania
S wedish furniture giant IKEA sees the potential for nine stores in Romania and aims to increase its presence in the country, after
posting the highest yearly sales increase in the 2015 catalogue year. The company has already fi led the documentation to get
the building permits for its second store in Romania, in eastern Bucharest, according to its representatives. IKEA’s only store in
Romania posted a 12.4 percent increase in sales in the 2015 catalog year ended August 31, to some €95 million. The company sold
over 14 million items, 7 percent more than in the previous year, and had almost 3.25 million visitors in its Baneasa store, located in
northern Bucharest. “We see the potential for nine IKEA stores in Romania. The group has already approved the expansion plans
so we will be busy for many years to come,” said Stefan Vanoverbeke, who recently took over as Retail Manager of IKEA South East
Europe, which includes Romania, Slovenia, Croatia, and Serbia. He didn’t mention where IKEA will open its new stores in Romania,
as this has not been established yet, or how big the investments will be. However, it is likely that the group will focus on big cities,
such as Cluj-Napoca, Timisoara, and Iasi, where the purchasing power is higher. “Romania’s economic development has picked up in
recent years, and the results of our Baneasa store are a confi rmation of that. There is demand, the only question is how fast we can
open new stores. We are confi dent that the economic development will remain strong for the next 5-10 years,” said Vanoverbeke,
when asked what determined IKEA’s decision to expand its operations in Romania, after being present in the country with just one
store for many years. Stefan Vanoverbeke, a Belgian who has been working in IKEA for 20 years, previously managed the company’s
operations in Poland, where the group started its expansion in the early ’90s, opening seven stores in ten years. In Romania, IKEA
opened its fi rst and only store (so far) in 2007. It took eight years for the group to announce a new store, in eastern Bucharest, on
Theodor Pallady Boulevard. The new store aims to be bigger than the one in Baneasa and the investment will likely be „tens of mil-
lions of euros”, according to Vanoverbeke, who didn’t comment on the possible opening date, as the company still needs to get the
permits and to hire a contractor for building the store. Meanwhile, the company will continue to focus on increasing the accessibil-
ity and aff ordability of its products. IKEA has launched online sales in June 2014, and in the ended fi nancial year some 8 percent
of its sales in Romania were generated via online orders. The highest number of online orders came from Bucharest, Cluj-Napoca,
Timisoara, and Iasi.
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64 Retail Guide 2015
Bulgaria Overview
Bulgaria’s outlook never looked brighter
Elie Issa
Bulgaria’s rising status is luring new players and creati ng strong demand for retail
The International Monetary Fund (IMF)
has raised its forecast for Bulgaria’s 2015
GDP growth to 1.7 percent in the latest
edition of its World Economic Outlook
(WEO), from the previously projected
1.2 percent from last April. Next year’s
growth outlook was also revised up to
1.9 percent from 1.5 percent.
Bulgaria’s fi nance ministry also raised
its this year’s GDP growth forecast to
2 percent from 1.4 percent projected
in the spring, citing better-than-expected
results from the fi rst half of the year. The
country’s economy expanded by 2 percent
y-o-y in Q1 and 2.2 percent y-o-y in Q2.
The IMF also projects that unemploy-
ment will decline to 9.7 percent in 2016
from 10.3 percent in 2015. Bulgaria’s un-
employment rate fell to 9.2 percent in
September from 9.3 percent in August, the
state labour agency said.
Foreign direct investment (FDI) into Bul-
garia increased 4.8 percent y-o-y to €907.3
million in January-July, preliminary central
bank data showed. Among the FDI com-
ponents, equity investment climbed 7.1
percent y-o-y to €219.1 million in January-
July, debt instruments rose 5.2 percent
y-o-y to €594.3 million, whereas reinvest-
ment of earnings narrowed 2.5 percent y-
o-y to €93.9 million. The central bank ad-
vised that the 2014 and 2015 data includes
estimates of reinvestment of earnings of
banks only, at this stage.
The Netherlands, which is known for at-
tracting company registrations with low
taxes, accounted for the largest seven-
month net direct investment infl ow in Bul-
garia of €620.2 million.
All the cited positive macro indicators
show that Bulgaria is sustaining its recov-
ery following years of stagnation that dent-
ed real estate investment in the country.
European Commission (EC) vice-pres-
ident Kristalina Georgieva said that Bul-
garia presently ranks eighth among the
EU countries in terms of absorption of EU
Bulgaria Overview
“The goal is to fi rmly focus on success-
ful businesses in Romania, Czech Republic,
Poland, Slovakia and Hungary,” an M&S
spokesperson was cited as saying. Add-
ing that new stores will be launched in the
Czech Republic and Poland over the next
two years.
The closure in the countries aff ected is
set to begin in January next year.
German discount grocery retailer Aldi,
however, is considering the Bulgarian mar-
ket, Capital Weekly reported. The retailer
has hired an unnamed international con-
sulting company to prepare a potential
entry. The project is at an initial stage and
there is no fi nal decision.
In Eastern Europe, Aldi is present only in
Hungary, Poland and Slovenia.
Earlier in September, German retailer
REWE Group said it will withdraw its dis-
count grocery store brand PENNY Market
from Bulgaria.
More than sixty German companies have
expressed interest in investing in Bulgaria,
which is a serious change in their number
compared to previous years. The news was
revealed by the Bulgarian Economy Minis-
The gap between rental levels in prime and non-prime shopping centres will widen further
funds. This is the fi rst time the country is
among the top 10 and it is possible to fur-
ther improve its standing by the end of the
year, she added.
Briefl y, Bulgaria’s rising status as an
emerging and rapidly expanding invest-
ment destination is obviously luring new
players and consequently creating strong
demand for retail, offi ce and logistics space.
With a local IT sector growing by 2 per-
cent every year and an export-oriented
software market, Bulgaria counts on the
IT industry as one of “the fastest-growing
of all Bulgaria’s industries,” according to re-
cent market data sources.
Norway’s Telenor, for example, which
owns Bulgaria’s second largest mobile
operator Telenor Bulgaria, is considering
the acquisition of a small bank or another
fi nancial institution, in a bid to start off er-
ing mobile money services, Capital Weekly
reported. This will be the fi rst such service
to be launched in Bulgaria.
Such a move seems justifi ed since the
company’s two biggest Bulgarian competi-
tors are both in positions to provide richer
product off erings. In July, the largest mobile
operator Mobiltel (Mtel, a unit of Telekom
Austria) agreed to buy 100 percent of blizoo
Bulgaria, a leading local provider of cable-
based triple-play services, from Swedish
private equity fund EQT V. The third larg-
est mobile operator, Vivacom, is also the
former state-owned monopoly and still
the largest player in the fi xed-line segment.
Telenor entered Bulgaria in 2013, buy-
ing the country’s second largest wireless
operator, then named Globul, as well as
the telecom retailer Germanos Bulgaria,
for €717 million from Greece’s OTE. Telenor
Bulgaria’s EBITDA edged up 1 percent y-o-y
to €60.6 million in H1 2015. The company’s
revenue rose 1.5 percent y-o-y, and the
EBITDA margin declined 0.2 percent y-o-y
to 38.6 percent. The company’s active cus-
tomer base narrowed by 6 percent y-o-y to
3.8 million at end-June.
However, it is not all good news. UK
retailer Marks & Spencer has recently an-
nounced it is pulling out of Bulgaria, Croa-
tia, Montenegro, Serbia, and Slovenia.
M&S has 12 stores (employing 106 peo-
ple) in these fi ve South-eastern European
countries, three of them in Bulgaria.
Retail Guide 2015 65
66 Retail Guide 2015
Bulgaria Overview
ter Bozhidar Lukarski at the offi cial open-
ing ceremony of the 54th Kaufl and store
in Bulgaria, which is also the chain’s tenth
store in Sofi a.
Lukarski noted that the expansion of
Kaufl and’s activity in the country is an ac-
knowledgment of the eff orts of the Bulgar-
ian government to establish favourable
business environment and to lure quality
investments. Kaufl and has so far invested
BGN 1.2 billion in Bulgaria, operates 54
stores and provides employment to 6,000
people, making it one of the largest em-
ployers in the country.
Apart from these contributions to the
Bulgarian economy, Kaufl and also pro-
vides the opportunity to 850 Bulgarian
producers to sell their products in one of
the largest retail chains in the country. This
creates preconditions for the establish-
ment and maintenance of competition
among Bulgarian enterprises. The Ger-
man Ambassador to Bulgaria, Detlef Lin-
gemann, said that German investors have
long-term perspectives. He also pointed
that the economic relations between Bul-
garia and Germany are far from having
achieved their full capacity.
Following a string of deals with under-
valued assets over the past two years,
the Bulgarian retail market is currently
witnessing a process of concepts for new
market positioning, according to Forton.
In April this year, the reconstruction of City
Centre Sofi a started and is expected to be
completed in early 2016.
This autumn, a number of contracts with
anchor tenants for more than 5,000 sqm in
the shopping centre with the mediation of
Forton / Cushman & Wakefi eld as the ex-
clusive leasing agent, will be signed.
“The market for retail space enters a more
mature phase that clearly stands out suc-
cessful projects and those whose concepts
are not working. While the fi rst group
shopping centres strengthen their posi-
tions, the remaining need a comprehen-
sive restructuring to continue to operate in
an increasingly competitive market,” said
Rosen Genev, Manager of Retail in Forton
/ Cushman & Wakefi eld.
Overall, the fi rst half of 2015 passed with-
out any new commercial projects being
launched, and the total market volume
was 763,000 sqm. Rental levels for prime
locations in Sofi a malls remain stable at
€20 per sqm. As to the prime high street Vi-
tosha Blvd, rents are stable at €44 per sqm,
according to Forton.
International brands of fashion and
shoes in the low and middle price range
remained among the most active ten-
ants in the second quarter, the expansion
of some of them already oriented to the
smaller regional centres, with a popula-
tion of over 100,000 people. During this
period, active expansion was noticed from
Polish shoe chain CCC, which opened
stores in the Mall of Sofi a, as well as Gal-
leria Burgas and Galleria Stara Zagora. In
Pleven, Tom Tailor and United Colors of
Benetton signed contracts with the Pano-
rama Mall. H&M also continued its expan-
sion in the country.
The retail parks sector also experienced
some activity, catalysed by the desire of
some large traders to diversify and opti-
mize their network of stores. The most vis-
ible of which was Retail Park Varna, where
IKEA opened a 2,500 sqm fi rst country
centre for orders. Nearby, are already pre-
sent toy chain Comsed and Decathlon.
Also in Varna, Praktiker began construction
of a new store next to Technopolis with
which both have a common owner.
In H1 2015, the retail market remained
unchanged in terms of new supply with
the total stock of contemporary retail
space in Bulgaria totalling 783,260 sqm,
and for Sofi a - 418,660 sqm, according to
Colliers International. No new projects
openings are expected to be launched by
the end of the year, Colliers noted.
Retail activity in Bulgaria will be stream-
lined on repositioning of existing shop-
ping centres (Galeria Plovdiv and City
Centre Sofi a) and unfreezing projects in
development stage (Markovo Tepe Mall
and Plaza West).
Colliers, however, assessed key retail pro-
jects in Sofi a from three diff erent perspec-
tives. “One fi nding is that anchors occupy
approximately half of a shopping mall’s
gross leasable area, regardless of its size.
The second perspective delves into the
tenants’ type of operations (local, interna-
tional or franchise) and their ratio in the
respective shopping centre.”
The retail project with the highest share
of international retailers, directly operating
on the Bulgarian market, is Sofi a Ring Mall
(55 percent), followed by Mega Mall (46
percent) and Serdika Centre (42 percent),
Colliers explained.
Despite the lack of new major opera-
tors, retail market demand will continue to
grow due to the large supply, the reposi-
tioning of projects, or a change of expan-
sion plans for retailers.
Increased activity and higher attractive-
ness of the retail park segment is expected
as a result to improvements in the func-
tional layouts and environment, as well as
a focus on synergy between operators.
The gap between rental levels in prime
and non-prime shopping centres will wid-
en further - the prime projects will contin-
ue to enjoy increasing rental levels, while
the rest will need to introduce a variety of
incentives to improve their market posi-
tioning, Colliers concluded.
CLOUD SERVICES FOR THE RETAIL INDUSTRY?
Cristiana Fernbach – Senior Associate,
Coordinator IP & Technology Practice
S.P.R.L. Menzer & Bachmann – Noerr
Cloud is considered to be the next big thing in the IT world.
Cloud computing refers to the delivery of applications over
the internet. It may reduce operational and IT costs for re-
tailers, reshaping their business in terms of scalability. Using
cloud retailers may profi t from a limitless amount of process-
ing power and storage capacity especially in peak sale peri-
ods. The implementation of these technologies requires proper risk management strategies
for ensuring the security and control of data. After the US-EU Safe Harbour set of regulations
regarding data transfers from EU to US being invalidated by the European Court of Justice
this month, alternative models, like EU model clauses have to be considered in case of EU-
US data transfers.
68 Retail Guide 2015
Croatia Overview
Development in regional cities
Gary J. Morrell
Mall of Split, a new retail development on the Adriati c coast
The Zagreb retail market has seen
rapid development over the past ten
years and with a shopping centre
density of 565 sqm of space per 1,000
inhabitants, the shopping centre market
in the city is regarded as saturated
and therefore no signifi cant market
entries are anticipated in the near
future. Developers are therefore shifting
their attention to smaller specialised
shopping centres in the capital, and
development in cities on the Adriatic
coast.
Zagreb shopping centre stock stands
at 447 million sqm with no deliveries
recorded in the fi rst half of the year,
according to JLL. The last signifi cant Zagreb
delivery was the 31,000 sqm Supernova
shopping centre/park located in the Buzin
district of the city. The €50 million complex
has provided a 13,000 sqm shopping cen-
tre and a 12,000 sqm retail park. This is the
seventh Supernova centre in Croatia by the
Graz-based Supernova Holding.
In another recent delivery IKEA has
opened its fi rst €100 million IKEA big box
store in SEE, located in Rugvica to the east
of Zagreb. The 38,000 sqm complex is one
of the biggest IKEA stores in Europe and
provides 1,600 parking spaces at the out-
of-town complex. According to IKEA, the
company is considering further outlets in
Split, Rijeka, Belgrade and Novi Sad.
Developers have also moved their orien-
tation toward small-sized and specialised
shopping centres in the Croatian capital.
For example, Agrokor has invested €13 mil-
lion in the 12,000 sqm Meridjan 16 neigh-
bourhood shopping centre.
With regard to demand, the leading Za-
greb shopping centre, Arena Centar, has
recorded 8.7 million visitors for one year.
“One of the country’s prime assets re-
corded a 5 percent footfall increase during
2014 when compared to the previous year,”
said JLL. The 62,000 sqm Arena Centar by
Trigranit is described as the largest fourth
generation shopping centre in Zagreb.
In general, economic conditions have
resulted in a fall in purchasing power caus-
ing a drop in rents in shopping centres
and high-street locations. Average rents
Zlatko Greguric – Principle Banker for Property
& Tourism Croatia and Serbia, EBRD
We are increasingly focusing on fi nancing
tourism and leisure and we have granted
a €30 million syndicated loan to a project on
the Dalmatia coast. The property sector is still
very interesting for us, especially in regional
cities. However, there are not many cities that
have not been exploited, but there will be
a further need for refi nancing and restructur-
ing of portfolios that should free additional
capital for the same developers to proceed
in other cities not only in Croatia but further
south. A typical starting point is a 50-50 loan
to value ratio. However, this depends on the
cash fl ow of the project and we could raise
the leverage to 60 percent. A number of in-
vestors are seeing the speed at which they
receive permits improve so we are no longer
talking about years, but a year or months, and
in exceptional cases people have been get-
ting them in a month or two.
Croatia Overview
Vedrana Likan – Managing Director,
Colliers International Croatia
The retail sector is in a healthy condition.
We need to accept that Zagreb is saturated
by shopping centres but what is lacking
are smaller neighbourhood centres in and
around Zagreb and in smaller cities in other
parts of Croatia. We have to accept the fact
that the retail market has reached a level of
saturation and we are now seeing a new cycle.
Arena Centar
and an additional 1.2 million tourists pass
through the airport every year. The com-
plex consists of around 200 stores in addi-
tion to restaurant, entertainment and lei-
sure facilities. The British department store
chain Debenhams has agreed a 3,000 sqm
lease and has established its fi rst Croatia
outlet on two levels.
Tulipan Grupa is also developing a
mixed-use complex adjacent to the retail
centre that will include a business and ho-
tel tower in addition to residential units on
a brownfi eld site in eastern Split. “The con-
struction of the overall project will result in
an urban renewal programme of the east-
ern Split area and create a new city zone,”
said Tulipan Grupa.
In another development on the Adri-
atic coast, MOF Immobilien and a group
of Austrian investors are developing the
€120 million Opatija Riviera Center, which
will deliver a 25,000 sqm shopping centre
as part of a wider complex with 5,000 sqm
of leisure, 7,000 sqm of hotels and 2,000
sqm of medical service space. The retail
space will be anchored by a hypermarket,
sports and fashion outlets. The complex is
located 15 km from Rijeka, the third largest
city in Croatia, and is due to be completed
in 2017.
Investment yields are uncertain in the
current market with low liquidity. However,
prime shopping centre yields are put at
8.00 percent for retail compared to 8.5 per-
cent for offi ce and 9.25 percent for industri-
al, according to JLL. These are regarded as
very attractive by CEE standards providing
a signifi cant premium on Central Europe.
Retail Guide 2015 69
Patrick Francolic – Managing Director,
Spiller Farmer Croatia
The ineffi ciencies of the rules regulating the
Croatia investment and development mar-
kets are being removed so we can bring back
trust for foreign and local investors to invest in
Croatia. We are not expecting any retail devel-
opment in Zagreb, however, there is a lot of
activity on the coast in Pula, Rijeka Split and
Dubrovnik.
for Zagreb shopping centres now stand
at €20-22 per sqm per month with high-
street rents of €60-70 per sqm per month,
according to JLL. The recession in Croatia
is negatively impacting all market sectors
from both a development and investment
perspective. Unemployment stands at 18
percent and an estimated GDP growth of
0.5 percent is predicted for the year, mainly
driven by the tourism sector.
“With regard to demand there are more
and more international retail brands com-
ing to the Croatia retail market using the
opportunity to negotiate their expansion
while the market is still in a downturn,” said
Vedrana Likan, Managing Director of Col-
liers International Croatia.
Outside the capital there are a number
ongoing retail developments in second-
ary cities on the Adriatic coast. The most
recent major signifi cant opening was the
61,000 sqm Mall of Split by the German
developers Tulipan Grupa and ECE Project
Management. This has been subject to sev-
eral postponements since it was granted
a building permit, reportedly due to plan-
ning issues and the €175 million complex
will be the largest shopping and entertain-
ment centre in Dalmatia. According to Tu-
lipan Grupa, Mall of Split is the fi rst LEED
Gold accredited shopping centre in Croa-
tia and the SEE region. Tenants are increas-
ingly demanding green elements in new
buildings and investors in general can no
longer aff ord to not have a development
green certifi ed.
Tulipan Grupa estimate a total catch-
ment area of 540,000 sqm for the centre
“Ambitious investors are changing their
focus towards Croatia as they see the op-
portunities to negotiate with very favour-
able yields, notably in the offi ce and retail
segments. We are aware that investors are
currently negotiating investment deals
for the major shopping centres and this is
changing the overall perspective for the
investment market. We are seeing new
investor/developers showing a serious
interest in investing in Croatia but primar-
ily they are looking at brownfi eld invest-
ments,” concluded Vedrana Likan.
70 Retail Guide 2015
Serbia Overview
Usce shopping centre in new Belgrade
Need for new development to meet retail demand
Gary J. Morrell
Belgrade is described as the most
under-supplied capital city retail market
in Europe, and has the lowest supply
in CEE and SEE along with Ljubljana.
However, demand is strong and retailers
are waiting to enter the market’s
limited supply of existing shopping
centres. Uncertainty remains with
regard to the schedule of much needed
developments as developers and
investors have concerns over spending
power and building regulations. Many
developers are constructing retail parks
in secondary cities.
T he current Western standard shop-
ping centre stock in Belgrade con-
sists of the 30,000 sqm Stadion
Vozdovac by Eurobau Connect, the 46,000
sqm Usce centre by MPC Properties, the
30,000 sqm Delta City development by
Delta Real Estate and the 22,000 sqm Mer-
cator Center. Theses developments are all
located in New Belgrade.
“Serbia is behind other markets in many
respects, while the fundamentals are still
there. Retail, offi ce, logistics and tourism
stock are all behind not only Western Euro-
pean but also Central European standards,”
said Zlatko Greguric, Principle Banker for
Property & Tourism Croatia and Serbia at
the EBRD.
JLL put Belgrade retail stock at only
128,000 sqm of traditional shopping cen-
tre space in a city of 1.65 million inhab-
itants. Despite the demand for quality
shopping centre space the construction
schedules for pipeline projects remains
unclear. Prime shopping centre density
stands at a very low 78 sqm per 1,000 in-
habitants while vacancy is close to zero.
Rents in prime Belgrade shopping centres
are estimated at €60 per sqm per month
compared to prime high street retail rents
of €80 per sqm per month.
“There are a number of shopping cen-
tres at various stages in the planning stage
in Belgrade, although the schedules are
uncertain refl ecting the unpredictable de-
Serbia Overview
Andrew Peirson – Managing Director,
JLL SEE
From an SEE perspective it would appear that
Belgrade has the greatest need for develop-
ment. Belgrade desperately needs new sup-
ply while retailers are waiting to enter the
market and there are waiting lists for the ex-
isting shopping centres. All this said, we are
still awaiting new development and there is
a lot of uncertainty with regard to future sup-
ply. The lack of product in all sectors is one on
the main reasons for inactivity in the invest-
ment market.
velopment process in Serbia across all mar-
ket sectors,” commented JLL.
The 80,000 sqm Delta Planet by the Ser-
bian developer Delta Real Estate (a mem-
ber of Delta Holding) in Belgrade has been
held up due to planning issues, although
the developer has announced that it will
commence construction of the €200 mil-
lion project by the end of year. The project
has been held up due to planning issues re-
garding the ownership structure of the de-
velopment site. One of the major problems
with regard to development is land own-
ership, as banks will not fi nance a project
unless the site is on freehold land but most
of the sites are on long leaseholds, so they
have to be converted to freehold and the
mechanism to do this is unclear. The gov-
ernment is striving to rationalise planning
laws in accordance with EU norms as nego-
tiations for EU membership are ongoing.
Bureaucratic and red tape problems such
as permitting and the conversion of land
ownership are generally regarded as prob-
lems that need to be resolved in order to fa-
cilitate the development of more Western
standard stock and facilitate investment.
In another development project Plaza
Centers has started construction of the
32,000 sqm Belgrade Plaza. In a recent in-
vestment transaction Plaza Centers com-
pleted the sale of the Kragujevac Plaza,
located in a regional city, to NEPI for a re-
ported €38.5 million.
A further development under construc-
tion and due to be delivered in 2017 is the
15,000 sqm Rajiceva shopping by a part-
nership of the Israeli Ashtrom Group and
the Belgrade-based Avital. The complex
is located in the centre of the more urban
Old Belgrade on the pedistrianised Knez
Mihailova street.
As the existing shopping centres fail to
provide suffi cient space to satisfy rising
demand from international brands many
retailers have opted for premises in retail
parks. Retail market development in Ser-
bia has shifted to retail park development
as the Mivne Group (part of the Fishman
Group) has delivered the fi rst retail park in
the Belgrade area. The 16,000 sqm Zemun
Park located on the Belgrade-Novi Sad
motorway will provide 30,000 sqm of retail
space and 800 parking spaces.
“The concept of retail parks is more
adaptable to the market and economic
environment in Serbia given that rents are
much lower than in shopping centres, as is
the cost of maintenance,” said Nir Makdasi,
Regional Director of the Mivne Group.
The EBRD has provided €13.5 million in
fi nancing for the €25.5 million fi rst phase
of the project. “Belgrade is at an early stage
of retail development with 20 percent of
the per capita average retail stock of other
CEE countries,” said the EBRD on the invest-
ment.
There are now seven retail parks operat-
ing across Serbia, for example the Israeli
Aviv Arlon Group in partnership with Da-
nos Properties is operating the Panceva
Retail Park. Aviv Arlon are also working on
the planned 11,500 sqm Zvezdara retail
park and residential project in Belgrade.
Also in Belgrade the Poseidon Group is
planning the Capital Park Ralovica retail
complex.
“There has been a signifi cant move to re-
tail park development and with the activ-
ity of developers already active in Serbia as
many as 20 parks are expected to be deliv-
ered in the next fi ve years. There is limited
spending power and therefore low retail
spending and the supply of shopping cen-
tres in secondary cities is low, due to the
expense of construction and management
and the diffi culty of sourcing fi nance, retail
parks are seen as a solution to this,” com-
mented Nevena Kosic, Director of the Re-
tail SEE Group.
The SEE retail developer NEPI is look-
ing to expand its retail network in Serbia.
“We have just bought the 24,000 sqm
Kragujevac Plaza and in Serbia this is huge
for a Serbian secondary city. Purchasing
power is quite low but on the other hand
we are looking for locations in cities where
there are sizable populations. We simply
have to deliver product that is applicable
to the size of the city. The size of a develop-
ment depends on the purchasing power of
a city. Therefore we are considering shop-
ping centres in Belgrade and Novi Sad
and retail parks in smaller cities. There is
demand for more retail development and
this why we are here,” commented Neman-
ja Savcic, County Manager at NEPI Serbia.
In a signifi cant development for the
Belgrade market the Abu Dhabi-based
developer Eagle Hills, in partnership with
the Serbian government, is developing
the €3.5 billion Belgrade Waterfront ur-
ban development project along the bank
of the River Sava in Old Belgrade. Accord-
ing to the development plans, the project
will include offi ces, apartments, hotels and
the biggest shopping centre in the SEE
region. The scheme forms part of a wider
trade cooperation between the Serbian
and UAE governments. Construction has
started and fi nance is being provided from
the Dubai side and Serbia is providing the
land.
Delta City shopping centre in Belgrade
Retail Guide 2015 71
72 Retail Guide 2015
Russia Quotes
Florian Schneider – Moscow Offi ce Managing Partner, Dentons
According to Rosstat, Russian retail trade volume fell 8.5 percent in January
– September 2015 compared to the same period in 2014. The major problems
that retailers are facing today include falling consumer demand, declining pur-
chasing power caused by salaries decreasing due to the weakening Rouble and
rising infl ation, and the high cost of credit resources. Since the beginning of the
year, many retailers have been optimizing their chains by closing or cutting the
size of ineff ective stores. However, many chains have adapted to the current
conditions and are continuing development, and some are ready to enter the
market if the economic situation stabilizes. International retailers are using the
current slow-down to establish multi-channel distribution lines, and especially
to optimize online sales. Developers continue to show interest in Moscow, St.
Petersburg and large regional cities, like Perm, Novosibirsk, Khabarovsk, Chely-
abinsk, Omsk, Vladivostok, Kazan, and Naberezhnye Chelny.
Sergey Gipsh – Managing Partner, Knight Frank
In previous years we witnessed a rapidly growing retail development market:
more than 23 million sqm of shopping centres was developed in Russia, and
more than 5 million sqm in Moscow. This year the quantity of new shopping
malls has sharply reduced, and the vacancy rate has reached a record 10 per-
cent. During the crisis the decline of rental rates amounted to 20-40 percent
(depending on the quality of the premises). But a large amount of vacant space
and attractive rents have made the Russian retail market attractive to foreign
retailers. The interesting fact is that despite the negative forecasts, the number
of new foreign brands entering the Russian market in 2015 didn’t decrease.
During 2015 about 36 international chain operators opened their fi rst shops in
Russia, almost 20 percent in the third quarter of 2015. Furthermore, favourable
conditions for the expansion of international brands are also being created as
a result of the activity of developers, consultants and management companies
in the local market.
Elena Zadorozhnaya – Head of Retail Tenant Representation, JLL, Russia & CIS
Given the high risks and challenges in the planning of retailer fi nancial strat-
egy, new brands’ expansion activity on the Russian market has fallen in 2015.
Overall activity trends of international retailers on the Russian market went
down; some brands left the market, and new ones rarely open their stores
directly and for sure these openings can’t be regarded as a background for
substantial demand increases on retail premises. Nonetheless, many retailers
still consider the Russian consumer market too big to ignore. At $684 billion
in 2014, retail turnover in Russia was the largest in Europe and even with a 9.2
percent fall forecast in 2015 it will remain easily within the top three largest
European markets. Macroeconomic weakness is seen by some as an opportu-
nity rather than a threat. Moreover, some retailers have adjusted well; grocery
supermarkets and discounters, children’s goods, and mass-market fashion to
name a few.
Russia Quotes
Olga Arkhangelskaya – Partner, Head of Real Estate, Hospitality & Construction
Services, EY
The retail market in Russia is currently following a general trend of economic
decline: the volume of purchases coupled with decreased purchasing power
translates into signifi cantly lower revenues for retailers. However, this trend is
not homogenous: some markets (e.g. luxury goods) are aff ected more than
others (e.g. food) and established shopping centres in Moscow have been
more successful in retaining high occupancy levels than new developments. It
is envisioned that the market has reached a certain structural stabilization and
the future outlook is more positive – with improvement of the economy and
production localization trends consumption is set to increase, revitalizing the
retail property market. The current market situation off ers unique opportuni-
ties for forward-looking retailers with long-term development strategies and
many international leaders in this fi eld are seeking the chance to expand their
store portfolio.
Stanislav Bibik – Executive Director, Head of Capital Markets,
Colliers International Russia
The retail segment is under a lot of pressure, which is due to several fac-
tors. Firstly, the devaluation of the Rouble forced retailers to raise prices in order
to compensate for the rising costs of imported goods. Secondly, the purchas-
ing power of Russian citizens has remained at the same level, retail sales have
dropped sharply, forcing retailers to renegotiate rental rates. However, property
owners have recognized the need to compromise on rental rates in order to
maintain occupancy levels. Most owners are willing to convert rents into Rou-
bles, and provide discounts. Underlining measures have decreased the cash
fl ow generated by retail properties and as a result, reduced the investment val-
ue of the assets. Nevertheless, the owners are not currently ready to accept the
new valuations of their assets and are waiting for the market to start recovering
next year, together with the recovery of the Russian economy.
Valentin Gavrilov – Head of Research, CBRE, Russia
Russia’s retail market remains under pressure from contracting business ac-
tivity. Two quarters of sharp decline in real GDP – 4.5-4.6 percent in Q2 and Q3
2015 generated a strong negative eff ect on real wages and retail sales, which
showed large falls: around 9 percent each. However, an expected recovery in
lending activity might contribute to the stabilization of GDP and population
income trends in early 2016, supporting consumer confi dence. Retailers – new
entrants are showing quite high activity, there have been 36 newcomers in
2015, attracted by signifi cantly improved commercial terms. Net absorption
by existing operating brands remains low, though brands are starting to think
about strategies in the future market recovery phase. Not surprisingly, just $650
million has been invested in retail properties so far this year. However, interest
is steadily growing.
Retail Guide 2015 73
74 Retail Guide 2015
Russia Overview
A brighter outlook is forecast for 2016
Retail demand slowing, but a gradual recovery forecast
Winston Norman
Retailer demand for retail space in
Moscow remains weak. According
to Colliers International, retailers are
continuing to apply caution to their
expansion plans, choosing only the best
locations on favourable terms. However,
vacancy in new properties with strong
locations and concepts are steadily
declining.
Michael Rogozhin, Managing Di-
rector, Retail, CBRE, Russia, com-
mented: “Such fundamental fac-
tors as a signifi cant decline in GDP and real
income of consumers continue to have
a negative impact on retail trade and, as
a consequence, the volume of absorption
of retail space. The slowdown of new retail
space supply in the Q3 was a temporary
deterrent to growth of vacancy rate, peak-
ing at the end of 2015. In 2016, the market
is expected to start a gradual recovery of
supply and demand balance, supported by
a decline in new construction and growth
of business and consumer activity.”
The decrease in real disposable income
is forcing consumers to switch to cheaper
products. According to Sberbank-CIB, 69
percent of consumers followed this course
of action in Q3 2015 compared to 63 per-
cent in the previous quarter. Meanwhile,
65 percent of consumers began to cut
spending even on everyday goods, and
to choose more aff ordable grocery stores.
The reduction in the purchasing power of
personal incomes is continuing to aff ect
retail sales, which in real terms fell by 8.5
percent in the fi rst nine months of 2015.
At the same time, large FMCG retailers are
more resilient to the current situation, and
are showing a 10-30 percent growth in
turnover due to the opening of new stores.
The total modern retail stock in Moscow
has now reached 5,139,000 sqm, or 419
sqm per 1,000 inhabitants, according to
CBRE. The second stage of Vnukovo Outlet
Village was the only opening in Q3 2015.
Its rentable area totals 10,200 sqm.
CBRE expects that delivery in Q4 will
reach 143,200 sqm GLA in fi ve new shop-
ping centres. Three of these (Avenue South
West, RIO on Kievskoye highway and Kali-
ta) are already at the fi nal stages of fi t-out,
and will very probably be opened on time.
Galereya Kutuzovsky and the retail gallery
in MFC Evolution Tower that were sched-
uled to open by the end of 2015, will now
be put into operation in 2016.
However, in the fi rst three quarters of
2015, eight shopping centres were com-
pleted with a total GLA of 367,000 sqm,
which is comparable to the 379,000 sqm
in the same period of last year. The to-
76 Retail Guide 2015
Russia Overview
The right F&B retailers are now very import to developers
tal amount of completions at the end of
2015 will be signifi cantly lower than in the
previous year. This is due to the relatively
small amount of completions planned for
Q4, when only 134,000 sqm will be con-
structed (versus 383,000 sqm in Q4 2014)
according to Colliers International fore-
casts. Thus, the total completions in 2015
are expected to amount to 500,000 sqm.
(762,000 sqm in 2014).
According to CBRE estimates, net ab-
sorption of retail space in Q3 fell to 4,100
sqm. Eleven new brands entered the Mos-
cow market in Q3. Moreover, during last
three months, four new brands have an-
nounced plans to open their fi rst stores in
Moscow. As a result CBRE expects to see
another seven to eight new brands in the
Moscow market by the end of 2015.
Overall it’s forecast that around 30 new
international brands will enter the Mos-
cow market by the end of 2015. Many of
whom have entered the market in order to
leverage on new opportunities. They were
driven by signifi cantly improved achiev-
able commercial terms and a much richer
choice of available options to lease retail
space.
However, two brands (American Ea-
gle Outfi tters and Desigual) left the mar-
ket as a result of chain optimisation and
new development strategies. In total six
brands left the market during the fi rst nine
months of 2015.
According to Colliers, it is expected that
foreign retailers in the next one and a half
to two years will be cautious in their expan-
sion plans in Russia. Despite being quite
a prospective market, Russia is not a prior-
ity market for active expansion. Western
brands that enter the Russian market in
this period will try to “test the waters” by
opening one-two stores in Moscow, but
their level of demand will be lower than in
2013-2014.
In Q3 the vacancy rate in Moscow shop-
ping centres remained at practically the
same level as in the previous quarter (9.2
percent). However, by the end of the year
the vacancy rate may reach 11 percent
following the” technical openings” of new
shopping centres.
In the shopping centres that were
opened during 2014-2015, the amount of
vacant space is steadily decreasing. This is
largely due to the fl exibility of owners on
commercial terms. This prompted 11 out
of the 29 new brands that came to Moscow
this year to open their fi rst stores in new
shopping centres.
The decline in consumer spending is
mainly being refl ected in the visitor num-
bers in regional and super regional shop-
ping centres, which are having diffi culty
retaining traffi c as consumers spend less
on entertainment and large purchases.
Footfall in these centres fell by 10-15 per-
cent on average compared to the previous
year. However, projects with a favourable
location and consistently high traffi c are
hardly suff ering from loss of customers.
Around 75-80 percent of market players
switched to rental rates in rouble equiva-
lent, which in 70 percent of cases is calcu-
lated as a percentage of turnover. At the
same time, rental rates in USD continue to
decline: prime rents decreased by 3 per-
cent compared to Q2 2015, and amounted
to $1,650/sqm/year.
Given that the current market condi-
tions could persist until the end of 2015,
Colliers do not expect these commercial
terms to change signifi cantly as there will
be no prerequisites for them to be revised.
According to Colliers International, the
vacancy rate of Moscow’s street retail
could rise to 14-15 percent from the cur-
rent 12.5 percent by the end of 2015. This
would be the highest rate in the last six
years (15 percent in H1 2009). Vacancy
continues to grow despite a decline in rou-
ble lease rates. After achieving economic
stability, vacancy rates will decline, but this
will not happen before mid-2016.
Ekaterina Podlesnykh, Head of Street
Retail, Colliers International, commented:
The only retail opening in Q3 – Vnukovo Outlet Village
Russia Overview
“There is an active rotation of tenants in
street retail – they are looking for attractive
premises that off er the most favourable
commercial terms. The vacancy rate will
continue to rise as a result of bank closures,
such as Nota Bank after the withdrawal of
its license. On average, rental rates will
remain at the current level, but on some
streets they will continue to decline. For
example, we expect rates to remain stable
in the central corridors that are in constant
demand (Stoleshnikov Lane, Kuznetsky
Most) while on the radial streets such as
Prospekt Mira we expect them to fall.”
Among the positive trends is the open-
ing of new catering establishments – by
both individual retailers and chains. The
fastest-growing catering retailers include
the St. Petersburg-based chains Mar-
ketplace and Italy Group as well as KFC,
Probka, Zotman, Kitai Chi and Cafezinho
do Brasil.
According to the latest Food and Bever-
age (F&B) report by CBRE, almost a third
of all visitors to shopping centres will visit
a restaurant or coff ee shop.
“F&B value is rather important for Rus-
sian consumers, though, of course, they
visit shopping malls not only for it,” com-
mented Michail Rogozhin. “The current
economic situation is forcing consumers
to reduce their expenses, which is under-
mining interest in visiting shopping malls.
As a result, developers of shopping malls
should come up with new competitive
advantages to sustain and increase foot-
fall. An average consumer is ready to save
money on clothes, but not on food. To-
day’s turnovers of F&B operators in Russia
has decreased. First of all it has aff ected
weak retailers who can’t make good of-
fers to consumers while strong brands
have become even stronger and contin-
ue to develop. Their involvement in the
creation of professional food courts with
a varied menu and aff ordable prices can
serve as a powerful advantage for a de-
veloper as well as ensure the operator’s
traffi c, thereby increasing the percentage
of revenue.”
For example, in the near future IKEA
plans to open renovated food courts
with an increased number of tenants and
a wider variety of choice in their existing
projects. In addition, co-operation among
food operators and other tenants, based
on joint actions and discount programmes,
could be even more eff ective in terms of
growth of footfall.
In conclusion, retailers continue to limit
their expansion by choosing only the best
locations and preferring Moscow to other
Russian cities. Nevertheless, the major re-
gional cities remain a target for expansion
in the future. Many retailers have taken
a wait-and-see attitude and are not hur-
rying with expansion plans until the eco-
nomic situation stabilizes. The crisis has
also aff ected the tenant-mix: new brands,
which developers had not previously wel-
comed to high quality shopping centres,
have started to enter projects with high
vacancy rates.
Retail Guide 2015 77
78 Retail Guide 2015
Ukraine Overview
Forum Lviv opening
Multi opens Forum Lviv, its fi rst shopping centre in Ukraine
On Friday the 25th of September, Forum
Lviv opened its doors to the public and
welcomed thousands of shoppers and
curious Lviv residents. Forum Lviv is
Multi’s fi rst shopping centre in Ukraine
and is located in the historic inner city
of Lviv and one of the most prestigious
retail projects in the country. Multi
Ukraine developed and owns Forum
Lviv with two Ukrainian real estate
partners, Galereja Centre and Bud
House Group. Forum Lviv covers an area
of 69,000 sqm with retail, restaurants,
entertainment, a cinema and an
underground car park.
The success of Multi’s latest retail de-
velopment was recognised almost
immediately, winning fi rst prize at
the recent EuropaProperty CEE Investment
& Green Building Awards in Warsaw. An in-
ternational Jury of some of the region’s top
professionals deemed the project the best
from a very competitive line up of new re-
tail projects from all over the CEE region.
“We are very pleased to have opened Fo-
rum Lviv,” said Jaap Blokhuis, CEO of Multi
Corporation. “We developed and realised
the shopping centre under exceptionally
diffi cult circumstances. We truly believe
that it is one of our greatest achievements,
and a milestone for Ukraine as a country.
We have managed to create a feeling that
Forum Lviv has always been here and is
an essential part of the beautiful heart of
Lviv. It is the fi rst project in Ukraine devel-
oped to high European standards and it
is BREEAM certifi ed. We have established
a reputation for Forum Lviv as a must-join
project among retailers and are proud to
have a 95 percent occupancy at comple-
tion.”
Forum Lviv will host 35,000 sqm of na-
tional and international fashion brands,
including ZARA (the largest store in
Ukraine), Women’s secret, Springfi eld, Ber-
shka, MANGO, Massimo Dutti, LaCoste,
Pull&Bear, Stradivarius, Reserved, Sinsay,
Cropp Town, Amstor, Comfy, Intimissim,
Intertop and LC Waikiki, with its fi rst store
in Western Ukraine, plus a food-court zone,
the electronics supermarket Comfy, super-
market Silpo, Igroland children’s entertain-
ment and a Planeta Kino cinema with Lviv’s
fi rst 4DX screen.
Forum Lviv is located in the city centre
on Pid Dubom Street, just a short walk from
the city’s main square and famous Opera
House. The three-storey shopping centre is
topped by a level complete with cinema,
leisure facilities and restaurants overlook-
ing the city. It also has an underground
parking garage with 600 spaces, the fi rst of
its kind in Lviv city. The Forum Lviv concept
was created by TTDesign, Multi’s in-house
design group, acclaimed for its outstand-
ing urban development and architectural
concepts. The local architect is the Lviv of-
fi ce of Tebodin Ukraine.
Lviv, which is located near to the Polish
border, is the cultural and economic centre
of Western Ukraine. The city has more than
700,000 inhabitants and plays an impor-
tant role at regional level. The centre was
incorporated into the UNESCO World Her-
itage List in 1998 and dates mostly from
the Habsburg period. Lviv is increasingly
popular with tourists, partly thanks to the
successful organization of Euro 2012 in the
city.
AZERBAIJAN
BELARUS
GEORGIA
KAZAKHSTAN
MONGOLIA
UKRAINE
EEA REAL ESTATEFORUM & PROJECTAWARDSNovember 25/26 2015, Kyiv
For further information contact:
Olga Solovei, CEO & Co-founder, Ukrainian Real Estate Club, 21\16, G.Skovorody str., Kyiv, Ukraine
+38 044 227-67-53 +38 067 656 76 81 [email protected]
Craig Smith / +48 604 144 769 / [email protected]
Alina Pushnaya / +48 665 545 154 / [email protected]
MEDIUM
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