The COVID-19 has disrupted both the operation and development of retail real estate markets worldwide, as well as in the CEE-17 countries. The government restrictions imposed on the operation of shops, service outlets, gastronomy, entertainment and leisure, have led to a dynamic growth of e-commerce sales and to changes in consumer behaviour.
These have also contributed to a 20-45% (depending on the country) decline in footfall figures in shopping centres, when we compared data from the middle of 2020, says a report from international property services company Colliers.
However, when comparing the COVID -19 crisis to the recession following the GFC, retail sales have seen a robust V-shaped recovery in a lot of cases, the international property services company said.
Labour markets in the CEE region, as well as purchasing power, seem to be in much better shape this time around than a decade ago, while the share of online sales varies quite considerably from early single digits in some countries, up to >18% in the Czech Republic.
Furthermore, there were several up-market brand debuts, including Hugo Boss (Albania), Yves Saint Lauren, Dsquared, Chanel (Czech Republic) and Armani Beauty (Romania).
“While keeping a close eye in the rear-view mirror for any unforeseen events that might creep up on us, it looks like the CEE region is set to remain one of the better performing regions in the world, a ca. 173mn consumer market that should continue to deliver better growth rates and returns than more developed markets in a lot of different sectors, including retail,” the report titled “ExCEEding Borders” adds.
(Graph Source: Colliers)
Retail Property Market in CEE 17 - key figures
The shopping center market in the CEE-17 is consists of almost 1,670 facilities, with a total GLA of over 34.6 million m² GLA, serving over 172 million consumers. The size of this market is also reflected in the annual purchasing power of the population with a total value of EUR 893 billion.
It should however be noted that the purchasing power of Central and Eastern European consumers is very diverse. Among the 17 countries analysed there are those with a purchasing power of 9,500-12,500 EUR per capita per year (Slovenia, Estonia, Czech Republic, Poland, Slovakia, Lithuania,) but also those with 1,500-3,500 EUR per capita per year (Ukraine, Belarus, Albania, Bosnia and Herzegovina).
The shopping center markets in the CEE-17 are also at different stages of development. The highest saturation of space per 1,000 inhabitants is recorded in Estonia (738 m²) with the lowest being in Albania (104 m²). The highest volume of retail space is located in Poland (12.1 million m² in 532 facilities) and the Czech Republic (4.2 million m² in 232 facilities) with the smallest being in Montenegro (110,000 m² in 14 centers).
There has been an increase in the number of small shopping centre formats and retail parks, considered by both developers and tenants as profitable investments, and by consumers as comfortable and safe places to shop.
At present, there are approximately 670 such centres operating in the CEE-17 countries, with a total GLA of 6 million m². The largest number of small schemes (5-10 000 m2 GLA, over 10 units) operate on the highly competitive shopping centre markets in Poland (1.2 million m² of GLA, in 164 schemes).
Colliers was formed in 1976 in Australia through the merger of three commercial property services firms. Between 1984-1990 the company expanded to Canada, U.S., Asia, Europe and LATAM. In 2019, Colliers International delivered a solid year of revenue and earnings growth, with professional real estate services revenues surpassing the $3 billion milestone.