EPP purchased 12 retail assets from the M1 Portfolio from Griffin. Image: EPP
Studies & Reports

Poland provides a dynamic retail environment

Union Investment’s new “Global Retail Attractiveness Index“ (GRAI), which analyzes the environments for retail investments in 17 countries around the world, recently showed that Poland is one of the most dynamic European markets. The latest data confirms this assessment.

Retail markets around the world are currently in good shape. A big and further increased optimism on the demand as well as the supply side supports this positive development in almost all markets that are relevant for investments. Especially in Germany and Poland, who are ranked at the top of the “Global Retail Attractiveness Index” in Europe, contribute significantly to the above-average market level. The Polish retail market shows the most dynamic development of all European countries included in the index. But what are the fundamental reasons for this dynamic trend?

Retail sales grew by 7.3% to the end of December 2017, reports Cushman & Wakefield in the latest “Poland Retail Snapshot”. Key market drivers are the country’s unemployment rate which is at the record-low level of 6.3% (Feb 2018) and rising wages (a 7.3% y-o-y increase). In terms of supply after a relatively busy end of 2017, the first quarter of 2018 saw only 52,600 sq m delivered. At the end of Q1 2018 the total retail stock in Poland exceeded 14.3 million sq m.

The retail development pipeline stands at more than 500,000 sq m, with nearly 80% to be delivered this year of which nearly 60% will be in major agglomerations. Major retail schemes scheduled to open in 2018 are Forum Gdańsk with 62,000 sq m and Galeria Libero in Katowice with 45,000 sq m. We will also see an increase of importance of smaller towns and municipalities with less than 100,000 inhabitants, where over 30% of the new retail supply for 2018 is scheduled to be delivered.

In Q1 2018, the retail transaction volume hit € 1.78 bn and accounted for approximately 87% of total investment volume (€ 2.05 bn). The outstanding investment volume was primarily due to the closing of the M1 Portfolio, consisting of 28 retail assets located across the country, the largest retail portfolio transaction on the Polish market.

The M1 Portfolio was acquired by Griffin Real Estate for ca. € 1 bn. As a part of separate agreement, EPP purchased 12 retail assets from the M1 Portfolio from Griffin. The first tranche of the EPP transaction including M1 Kraków, M1 Czeladź, M1 Łódź and M1 Zabrze took place in Q1 2018 for €358.7 m. Another transaction which added to the record volume in Q1 2018 was the acquisition of Galeria Katowicka by Employees Provident Fund of Malaysia for ca. €300 m.

Outlook

Prime retail assets will continue to benefit from below average vacancy rates and stable rental levels. As major brands consolidate their occupation into larger units in the best centers or seek further incentives and when on turnover based rents. During 2018 the market will also have to contend with the phased introduction of Sunday trading restrictions, which is expected to redistribute the weekly timing and, to a lesser extent, the location of sales, and a new property value based “minimum income tax”.

 

Sign up for our ACROSS Newsletter. Subscribe to ACROSS Magazine.

Sign up for our ACROSS Newsletter. Subscribe to ACROSS Magazine.

Studies & Reports MORE

Footfall-Anchors Post Corona – 5 Propositions for the New Future of Retail

“Covid-19 is the biggest challenge of our time and it affects the retail sector as well as the retail real estate market. With the study Footfall Anchors Post Corona–5 Propositions for the New Future of Retail, we discuss the current situation for retailers, investors, project developers, and municipalities on a broad scale. In collaboration with renowned experts we discuss the new future of retail, the real estate industry, and subsegments of the retail real estate sector. The result is a comprehensive documentation of the status quo regarding the situation of retail asset class.” - Angelus Bernreuther, Head of Investor Relationship Management at Kaufland Germany.

Yet another hurdle cleared

Modern retail stock in Romania will exceed the 4 million sq m threshold by the end of the year. Several openings were postponed due to Covid-19.

Poland: A review of historic months

Almost 90,000 sq m of new retail space was delivered to Polish market in the second quarter of 2020. Footfall amounted to approximately 80% of last year’s due to the pandemic.

Drastic sales losses in Swiss malls

Malls in Switzerland are currently losing 39 million Swiss francs in revenue per day.

Impact of COVID-19 on the Czech Republic’s retail sector

The corona virus pandemic and the related measures represent an entirely new and unexpected situation for the entire real estate market, with a global scope and a major local impact on everyone. According to Cushman & Wakefield Czech Republic, retail is one of the most affected sectors, yet it should also play a pivotal role in re-starting the economy.

29.7 million euros gross lost revenue per day in Austria

Standort + Markt recently published a first estimate regarding the anticipated daily loss of revenue of shopping places in Austria due to the corona shutdown. Its results provide solid guidelines for the European retail real estate market in general.