Redevelopment of existing shopping centres may be further advanced in Western Europe but it is also becoming a trend in Central and Eastern Europe, according to Tomasz Lisiecki, Chief Development Officer, Trigranit, Hungary.
Redevelopment of existing shopping centres may be further advanced in Western Europe but it is also becoming a trend in Central and Eastern Europe, according to Tomasz Lisiecki, Chief Development Officer, Trigranit, Hungary.
‘From our experience, redevelopments are quite popular. The market is ripe for it, especially the hypermarket-anchored malls.’
Lisiecki made the comments at PropertyEU's Retail Outlook Briefing at Mapic in Cannes in late November. Small retail convenience schemes are in general more popular in Central Europe and there are ample secondary and tertiary cities that have been neglected in recent years, he added. ‘These schemes attract a large melee of potential tenants. It’s possible to look at the development angle as well.’
Redevelopment and refurbishment is also a theme for CBRE Global Investors in Central and Eastern Europe, said Bas Tiemstra, the company's head of asset management retail EMEA. ‘The shopping centres that we have in CEE are well established but are now entering phase that they need to be re-energised and revitalised, also to keep the competition away. On the operational side, we have very bespoke strategies for every asset but generally speaking the maturity of the shopping centre and the market will determine the action we need for a specific centre.’
Trying to understand the consumer is a big theme, he added. ‘There’s quite a lot of competition and shopping centres are changing. Some anchor tenants are struggling with their formats and new anchors like Primark are also changing the game. These retailers can have a positive effect on footfall, but you others being slightly worried about the competition
One of the key success factors of retail schemes, Lisiecki said, was to create mixed-use developments and create reasons for consumers to linger longer in the mall. ‘Food courts and entertainment are becoming a bigger chunk of the whole,’ he noted.
Strong focus on asset management
Jaap Gillis, CEO of Bouwfonds Investment Management, likewise sees investment opportunities in central and southern Europe. ‘Germany and the UK are attractive markets but it’s hard to find good core product there and if you do find them they are outrageously expensive, especially if you’re a buyer trading with a weak pound.’
Bouwfonds IM is strongly focused on management of the investment assets, Gillis said. ‘We spend an enormous amount of energy on this. Most investors are looking at improving the efficiency of their business processes. Making money is also about that side of the deal, not just the transaction itself. There’s less and less room from investors and KPIs to waste money. Optimising CSR processes and saving money is a huge trend. We’re going the same way as the car industry, we need to be cheaper, more efficient and produce less waste.’
AEW Europe has also shifted its focus from core and core plus to value add assets, Nicolas Petit, head of retail asset management at AEW Europe, France, told the briefing. ‘We are seeing that some of our assets are ageing and that they are no longer in line with the expectations of our customers. One of the tools we have for ageing assets is redevelopment and asset management. We aim to try to be on top of the market.’
While Poland remains the largest economy in CEE, the big elephant in the room is how the newly elected government will respond, Tragranit's Lisiecki said. ‘Some of the messages that are coming out are quite worrying for our industry,’ he said pointing to a proposed tax on retail spaces above 250 m2. ‘The plan is for a 3% tax on turnover, which is quite high. The idea is to help local retailers, but what it’s going to do is burden them more than the international ones which can count on financial backing. This is a concern for grocery retailers in particular.’
Another concern is a proposed tax on lenders which will likely put a damper on development funding, he added. ‘There’s a lot of uncertainty and the rhetoric that has been coming out so far is worrying. We probably won’t have clarity for the next three to six months.’