Russia poised to become Europe’s second-largest shopping centre market

ESCD table
Click to Enlarge

• Russia will soon overtake the UK for the first time to become the second-largest shopping centre market in Europe
• Total new European shopping centre space added to the market in 2013 is projected to be 7 million sq m – this would be the highest level since 7.8 million sq m in 2009.
• Over 110 thousand sq m of retail space in shopping centers are in the pipeline for the Czech Rep. in H2 2013. 

C&W’s European Shopping Centre Development 2013 report ranks France (with 17 million sq m) and the UK (16.48 million sq m) as the top two markets in terms of total existing shopping centre space.  But Russia, the third largest market with 16.47 million sq m of space, will shortly surpass the UK. The Czech Republic is with the existing 2,1 million sq m of shopping centre space on the 17th position.

C&W’s report forecasts 7 million sq m of new shopping centre space will be added to the European market this year. This is mainly due to the fact that several schemes were delayed last year due to funding issues in certain markets which caused completion to slip from H2 2012 into 2013.  70% of new shopping centre space in 2013 is estimated to be delivered in Central and Eastern Europe, and in total 215 new shopping centers are scheduled to open across Europe this year.

We are also seeing a trend of mature Western European markets shifting focus towards refurbishing and extending existing schemes rather than sourcing new space for development.

“Czech Republic is still seeing new development projects, albeit of a different type than in the past. However, the trend of refurbishments and extensions of successful schemes is also visible, and we can say that we are in the middle of the road between a developing and a mature market,” says Jan Kotrbáček, Head of Retail Agency at Cushman & Wakefield Czech Republic and Slovakia.
“Among new centers being planned or developed in the Czech Republic in the coming years are Quadrio in Prague or Central in Kladno. Successful schemes to be extended are IGY in České Budějovice or OC Královo Pole in Brno,” adds Kotrbáček.

Investment
More than €33 billion of retail assets were transacted across Europe in 2012. The UK and Germany remain the dominant markets for retail investment in Europe – together both account for more than half of the European total. In the Czech Republic, about €116 million of retail assets were transacted the last year.

“We are seeing a strong H1 for investment, as investors are looking to put more capital into retail assets across Central Europe. They are interested primarily in dominant regional or centrally located down-town schemes, and are willing to price aggressively for such product. The Czech Republic, along with Poland are the prime markets of interest, with regional cities coming more to the fore.  Total volumes are also likely to increase as more owners start to price at market,” says Jonathan Hallett, Managing Partner at Cushman & Wakefield Central Europe.