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Promenada Craiova, Romania. /// credit: Bellier
Promenada Craiova, Romania. /// credit: Bellier

International Retailers Crowd into CEE as Economic Growth and Household Consumption Outpace Western European Markets

Rising disposable incomes across Central and Eastern European markets are outpacing those in more mature Western European economies and driving a more dynamic tempo of consumer spending in a region under-supplied with modern retail space, NEPI Rockcastle concluded in its recent third-quarter financial results.

NEPI Rockcastle is experiencing a robust uplift in net operating income as international and local retailers expand in the region to capture a growing cohort of more affluent consumers and higher margins in these markets.   

“Retail markets across CEE rebounded robustly after the pandemic, and economic growth and consumer consumption in our major markets are significantly stronger than in Western European countries. This is driving higher turnover and margins for tenants in NEPI Rockcastle’s close to 60 shopping centers across the region and attracting new international retailer entrants to these markets, or encouraging brands that are already present to expand their operations,” comments Marek Noetzel, NEPI Rockcastle’s COO.

On November 16, NEPI Rockcastle reported a 23% increase in net operating income to 365 million euros in the nine months to September 2023 (as compared to the same period in 2022), mainly driven by a combination of strong tenant sales performance and the contribution of acquisitions completed in 2022. In the first nine months of 2023, NEPI Rockcastle signed 882 new leases and lease renewals, for more than 188,200 sq m, of which 42% by GLA are new leases. International brands accounted for 58% of newly leased GLA. 

Notable new lettings include the world’s largest fashion retailer,Inditex, which recently chose NEPI Rockcastle’s newest development, Promenada Craiova in central southern Romania, for the opening of a 4,200 sq m Lefties store, its first location for the brand in CEE. In addition, more than 40 international brands chose the new development as the destination for their expansion in the region. These include Bershka, Calvin Klein, Massimo Dutti, Mohito, Peek & Cloppenburg, Stradivarius, Tommy Hilfiger, Under Armour and Zara – all of which are opening for the first time in Craiova. Promenada Craiova is an 80,000 sq m retail scheme comprising a 53,250 sq m GLA shopping center and an adjacent 10,350 sq m GLA retail park. The retail scheme also incorporates a 16,000 sqm GLA DIY store, owned by Dedeman. On its first day of trading, 55,000 visitors swamped the malls to visit the 120 brands opening.

Other international retailers new to the NEPI Rockcastle portfolio in the past two years include Irish value retailer Primark, Australian jewellery brand Lovisa, Digital native brands Epantofi, a Polish online footwear retailer, and Modivo, one of Europe’s leading online retailers of clothes, footwear and accessories.

Existing international brands that are growing strongly in the region include Zara, British brand JD Sports, Adidas and Nike, and Mango. Meanwhile, regional brands expanding include Polish brand Reserved, Half Price, Sinsay, and 4F.

“The multitude of international and regional retailers opening and expanding across our retail portfolio is indicative of how compelling the CEE markets are right now compared to the more mature and saturated Western European retail markets. In 2024, average GDP growth across the CEE is forecast to be double that of Western Europe, operating costs have stabilized, and household income and consumer spending are holding up well. These factors present our retailers and other tenants with outstanding opportunities to grow their presence across the region,” concludes Noetzel.


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