ACROSS | The European Retail Real Estate Magazine

Studies & Reports

Poland provides a dynamic retail environment

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

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.

Studies & Reports

PEOPLE IN THE EUROPEAN RETAIL REAL ESTATE INDUSTRY

Recruitments, promotions and appointments in the European Retail Real Estate Industry.

Center Customers Focus on Short Travel Distances

Good accessibility is one of the main criteria for the success of a center. There is a lot of catching up to do in the digital sector.

Stable first half-year in the Russian capital

Knight Frank recently published the “Retail Market Report Moscow H1 2018”. The most important event was the commissioning of “Kashirskaya Plaza”, which opened with a high occupancy rate – not only by area but also by number of stores.

RETAIL INVESTMENT: WHEAT SEPARATED FROM CHAFF AMID GLOBAL UPTURN

The new Union Investment index analyzes the attractiveness of the top 17 markets.

More than just high streets: Milan

The capital of the Lombardy region is recognized as one of the most famous fashion hot-spots in the world and it is Italy’s industrial, commercial, and financial heart. The city continues to attract new businesses and investments – and new shopping centers.

Constant change along the Bosporus

Cushman & Wakefield recently published the “Turkey – Retail Market Snapshot – First Quarter 2018”. The acceleration in the country‘s investment market signals that further consolidation in the shopping center market can be expected.