Shopping Centres Development

23 Jun, 2008, Prague, Bratislava

The current boom in shopping Centres in Europe will continue in the future. In 2008 and 2009, the shopping centres’ surface area will increase by 22 million square metres. Anticipated new construction in the Czech Republic is 340,000 sqm, with 325,000 sqm in Slovakia. This information comes from the European Shopping Centres Report released by the leading consultancy company Cushman & Wakefield.

This year, some 14 shopping centres with a total area of 250,000 square metres will open in the Czech Republic (this includes centres which opened during the first half of the year). This number includes only new shopping centres and not the expansion of existing ones. Next year, this figure will be 90,000 sqm in six new shopping centres.

“Fears that the mortgage crisis would have an impact on the Czech market have not been immediately realised. As far as we know, no centre has had to halt or abandon construction for this reason. Building a shopping centre is a demanding process which lasts around four years from planning to the actual opening of the centre. Developers may expect pressure from the financing institutions to increase the number of leases concluded prior to beginning construction,” says Martin Žížala, head of Cushman & Wakefield’s retail team for the Czech Republic and Slovakia.

“Construction in Slovakia in 2009 will exceed that in the Czech Republic. Slovakia today has less shopping surface and thus has some catching up to do. When calculated on a per capita basis, it is growing much faster and we can expect that in a few years the Czech Republic and Slovakia will have a similar per capita figure,” says Žížala, adding: “We talk to retailers every day – those with branches in the Czech Republic have confirmed that they are interested in entering the Slovak market as well.”

Within Europe, the greatest construction in 2008 - 2009 will be in Russia, where more than three million square metres are planned. In the same period, nearly three million m2 will be built in Ukraine. Just under two million square metres of shopping surface are being built in Spain and Romania, and around 1.5 million m2 are being planned in Poland and Turkey (see table).

Many central and eastern European countries have an insufficient amount of shopping surface and are building on greenfield sites. In more developed markets, construction tends to take the form of the revitalisation of town centres.

In Russia in the coming years, developers will focus on towns with a population of up to 300,000 inhabitants. Ukraine is a few years behind Russia, with outdated sales formats still dominating. Nevertheless, there are plans for the construction of large shopping centres which, together with the arrival of large international brand names, will significantly change Ukrainians’ shopping habits.

The densest network of shopping centres in Europe is in Norway, which has 641 sqm per thousand inhabitants (data from March 2008). Following at a large distance are Sweden(361 sqm per thousand inhabitants) and Ireland(356 sqm per thousand inhabitants). The Czech Republic has ca. 160 sqm per thousand inhabitants and Slovakiahas 125 sqm per thousand inhabitants. Austriahas almost double the sales surface - 304 sqm per thousand inhabitants.

“From this we may infer that even Czechs still have some catching up to do. Developers are now looking at smaller towns such as Most, Opava and Kladno; for which the suitable shopping centre size is around 20,000m2. The current trend is to return to the towns – just look at the Karolina project in Ostrava or Kaskády Zlín. New shopping surface is also being created thanks to the expansion of existing shopping centres. For example, expansions are being planned by Olympia Brno, Černý Most in Prague and Nisa Liberec,” says Alexander Rafajlovič from the market research department at C&W.

Last year, some 8.2 million m2 of new shopping surface was built in Europe at a total 320 new shopping centres and 54 expansions of existing projects. The anticipated amount of construction in 2008 and in the following year is 11 million m2. By the end of 2009, the total area in Europe should thus grow to 134 million sqm.

SHOPPING CENTRE SPACE ACROSS EUROPE

Country	Total sq m pipeline, excl. extensions 08/09	Current gross leaseable area sq m/1,000 population
Russia	3,202,000	62.5
Ukraine	2,877,443	42.0
Spain	1,988,539	239.7
Romania	1,817,407	40.9
Poland	1,503,700	142.3
Turkey	1,474,703	52.9
United Kingdom	1,278,859	244.0
France	1,134,850	221.6
Italy	1,132,190	187.4
Portugal	1,111,863	228.5
Germany	953,812	148.4
Bulgaria	583,500	11.4
Czech Republic	339,220	158,5
Slovakia	325,690	106,9
Greece	284,084	34.9
Austria	264,245	304.3
Belgium	259,691	93.1
Croatia	245,000	79.2
Netherlands	212,500	343.4
Hungary	211,800	120.1
Denmark	162,000	252.0
Ireland	161,542	356.1
Lithuania	154,000	191.1
Finland	136,500	248.6
Slovenia	126,000	132.1
Serbia	106,000	14.5
Latvia	95,000	216.2
Sweden	73,700	361.6
Luxembourg	69,000	327.4
Switzerland	32,000	176.0
Malta	21,133	97.9
Norway	14,500	641.3
Bosnia & Herzegovina	10,000	10.8

Source: Cushman & Wakefield

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