EPP issues optimistic update on Poland’s recovery from latest COVID-19 pandemic wave

With one of the lowest and consistently declining COVID-19 infection rates in the EU, growing number of vaccinated residents, entertainment and schools reopened and social gatherings resumed, Poland is returning to pre-pandemic normality. A broad opening of almost all sectors of the economy in recent weeks has again allowed Poles to travel, visit restaurants, go to the cinema or a concert, watch a game in a stadium and even, from 26 June, party in a night club. Lifting the majority of restrictions is due to, among other things, the progress of the national vaccination programme. By 17 June, 26 million COVID-19 vaccine doses had already been administered in Poland and 42% of the population had received at least one shot.

Perspectives for the Polish economy are equally bullish and Oxford Economics has maintained its forecasts of cumulative Polish GDP growth of more than 8% by the end of 2022. As the EU’s sixth-largest economy, Poland remains one of the most stable and attractive investment markets in Europe, and EUR 172 billion support from the EU budget and recovery fund should boost it even further in the coming years.

Tomasz Trzósło, CEO of EPP, says: “EPP operates in one of the strongest retail markets in Europe. We are pleased to see continued improvement in Poland such as its declining number of new COVID-19 cases and advanced vaccination programme, as well as increased economic activity, footfall levels and tenants’ sales. All of this signals a rapid recovery after the recent pandemic wave and stable future growth, allowing us to look ahead with cautious optimism.”

This cautious optimism is now also evident in the retail sector. Polish shoppers can again enjoy almost the full range of shopping centre offerings, including food and beverage and entertainment –  only bowling alleys are yet to resume operations on 26 June. Customers flocked back to EPP’s retail assets immediately after lifting the trading restrictions on 4 May, returning quickly to their pre-pandemic social and economic lifestyles. That strong rebound in retail was witnessed post each of the previous lockdown periods in the country as well. This time it was even more evident in the footfall and sales results.

Recently conducted market research shows that, in anticipation of shopping centres reopening, Poles actually held back spending, preferring to wait and purchase in stores. Once again it confirmed their preference for the physical interaction of in-store shopping, which can’t be replaced by buying online. It is clear that Poles chose bricks-and-mortar retail to do their shopping. That is evident in EPP’s shopping centres, where tenant turnover continues to increase more quickly than footfall and shoppers have bigger basket sizes now. In February 2021 sales had already reached 99% of levels noted in pre-pandemic February 2020 despite footfall of 71%. In May 2021 sales were 113% of May 2019 levels with the footfall rate of 82%. May 2021’s top-performing categories by turnover compared to May 2020 were fashion & accessories (+26%), household & appliances (+21%) and speciality goods (+9%). Consumption in Poland is driven by low and decreasing unemployment rates, consistently rising wages and growing purchasing power. Retail sales are forecast to continue to grow quickly – by 4.9% this year and 3.3% in 2022. The country is expected to have one of the highest European growth rates in household income and consequently consumer spending by 2030.

Retailers also continue to show robust demand for space in EPP’s retail portfolio. As a result, occupancy rates remain strong and stable at 95.5%. New leases signed include, amongst others, the debut of a new concept store HalfPrice by CCC, optician KODANO, Big Star denims and Sensi Hemp cosmetics. Notably, gastronomy tenants, deeply affected by the pandemic, also recently opened new stores, including Tigon Asian Cuisine, Soya Sushi or Stacja Burgera fast-food restaurant.

Moreover, EPP prides itself of its innovative solutions. The business consequently continues to develop tools for the retail sector such as EPP Connect – an information and data exchange platform, launched by the company in its shopping centres to support tenants. A cutting-edge software makes the cooperation between all parties easier, faster and more efficient. As a responsible business, sensitive to social needs, the Polish landlord also places a high priority on its corporate social responsibility (CSR) approach as well as a wider ESG strategy. EPP carries on with numerous of life-changing community initiatives currently, supporting education, ecology, health and issues relevant for local communities and their members.

EPP will further its clearly determined goals and well-established strategy in the months ahead, flexibly adjusting to the current situation and building resilience for the future challenges.

“EPP’s strategic objective to reduce leverage in the business by disposing of a select group of assets through either outright sales or joint-venture sales to new long-term-oriented partners remains a focus. We believe that there is liquidity in the Polish market, however patience and a period of stabilisation in the retail environment is required to advance this strategy. For now, EPP can meet all its financial needs and has adequate liquidity for the period ahead,” confirms Tomasz Trzósło.