Jones Lang LaSalle has released the new CEE Retail research report "Looking beyond the short term. The report reviews the retail development opportunities and potential across CEE region covering Croatia, Czech Republic, Hungary, Poland, Romania, and Slovakia.
Beatrice Mouton, Head of Retail CEE at Jones Lang LaSalle, said: "This report outlines the current retail market situation in the CEE region after the financial turmoil, and also foresees the ways it will be formed in the future. Economies of each country, maturity of the retail markets, retailers, developers and investor's plans are crucial factors in this respect; however, when looking beyond the short term other aspects and trends need to be taken into consideration. New retailers are looking at opportunities at tried and tested schemes where demand remains high. In these schemes, especially in the case of Poland and Czech Republic, we may see mild rental growth over the next 18 months provided that the economy remains stable."
The report analyses the following 5 key issues and trends in the CEE retail environment:
1. Economic strength & growth potential:
The global crisis impacted all CEE markets and each found itself in different economic situation, therefore each of them requires individual attention. With some positive economic indicators such as GDP growth forecasts, inflation levels, growing retail sales and foreign direct investment inflow, the economy in most of the CEE states is stabilizing. Poland was the only EU and CEE country to avoid recession with positive GDP growth and positive retail sales performance.
2. Development market sentiment:
The overall sentiment on the retail market is reasonably optimistic in most of the countries which indicates further retail development potential in the whole region. The construction of new schemes will be continued, albeit much slower. In addition, modernizations and extensions of existing older type of shopping centers will be undertaken.
3. Leasing market sentiment:
Retailers remain selective in choosing location for new stores with quality, positioning and location being the key factors in this respect. Prime shopping centers will be favored and featuring higher demand, low vacancy rates, and possible rental growth. Increasing interest in high street locations is also noticeable in Poland and Czech Republic.
4. Investment market sentiment:
In 2010 Poland stood out from its regional counterparts and witnessed stronger investor interest for well performing shopping centres. However, in the short to mid term capital will return to the rest of CEE and more prime product will become available for sale across the whole region.
5. Long term market trends:
In the long run, it will become key to understand customers in terms of their profile and shopping habits. Customers will be a key stakeholder group alongside the existing stakeholders i.e. developers, retailers, landlords and investors who will need to carefully research and monitor ever changing customers' shopping preferences. Linked to this is a growing role of internet as a shopping tool. Asset managers will need to play an important role changing the image of retail assets and proactively improving the performance of brick-and-mortar shopping centers.