Slovakia’s development prospects for retail shopping properties are less gloomy than the predictions for other parts of Europe. However, the shopping centre projects planned for completion in 2009 and 2010 are still reflecting the pre-crisis optimism of developers and the economic conditions for further development of the retail sector may not be as rosy in coming years.
Only the capital of Slovakia is currently home to multiple shopping centres but several regional cities can expect to get the keys for several new shopping centres before the end of 2009. Real estate consultants warn that some of the projects might get delayed due to the more difficult economic conditions but one global real estate consultant estimates that about 115,000 square metres of new retail space will be available for shoppers in Slovakia before the end of the year.
Across all of Europe, next year is expected to record the lowest level of shopping centre development in the past five years, with only 7 million square metres of new space due to open in 2010. The full impact of the global recession is likely to be most felt in 2011, when only 5 million square metres of space is predicted to open across Europe, the lowest amount since 2003, global real estate adviser Cushman & Wakefield said in a recent report.
According to the European Shopping Centre Development report, 2009 will see around 8.7 million square metre of new shopping centre space open, which is a decline of 5 percent year-on-year. In the first six months, 3.1 million square metre of space opened, including 115 new shopping centres and this was an 18 percent decline compared to the same period in 2008.
“Completion levels are not expected to pick up significantly for 2 to 3 years,” the report suggests.
Retail markets across central and eastern Europe (CEE) are being affected by the impact that the financial crisis is now having on the real economy, leading to lower retail sales, downward pressure on rents, and retailers cutting their expansion plans in the region, according to a market report for the first half of 2009 prepared by CB Richard Ellis.
Expansion of CEE retail markets slowed significantly in the first half of 2009 while significantly less new shopping centre space will come to CEE markets through the end of 2010 than was forecast a year ago, said the report.
Most retailers have curbed expansion plans. An exception to this trend is discount retail chains which are now seeing increasing revenues and have a unique opportunity to gain market share, according to CB Richard Ellis.
Slovakia’s retail reality
In Slovakia, the volume of planned shopping centre projects between August 2009 and December 2010 should reach 234,896 square metres, which would be a 28.6 percent increase. The newly-opened shopping centres between January 2009 and June 2009 added 33,000 square metres, which was a 4.2 percent increase, based on data from Cushman & Wakefield.
According to CB Richard Ellis there were 720,400 square metres of modern shopping centre space at the end of the first quarter of 2009 in Slovakia, a doubling of this kind of retail stock since 2005.
By the end of the first quarter of 2009 the overall density of shopping centres in Slovakia was 133 square metres per 1,000 people and Bratislava was home to 40 percent of the total shopping centre space. However, of the planned 115,000 square metres of new retail shopping centre space for 2009, 32 percent will be located in Nitra, 30 percent in Bratislava and 23 percent in Trenčín, CB Richard Ellis wrote.
There were 44 modern shopping centres in Slovakia in the first quarter of 2009, an increase of 26 percent year-on-year. Small-sized shopping centres dominate the domestic market and account for 77% of the total, followed by medium-sized centres accounting for 16 percent, according to the CB Richard Ellis report.
That report lists the primary new expansion projects since the first quarter of 2008 to be: expansion of the Optima OC shopping centre (16,300 square metres) developed by Atrium European Real Estate; expansion of the Avion Shopping Park (12,000 square metres) developed by IKEA; StoreLand Trnava (12,000 square metres) developed by BZ Group; and Tesco Galeria Lamač (15,900 square metres) developed by Tesco Stores SK.
The most significant retail shopping centre projects completed, or expected to be completed, in Slovakia in 2009, according to the Stavebné Fórum internet portal, are the Galéria Košice shopping centre with 16,500 square metres, the Galéria Mlyny in Nitra with 25,000 square metres, Madaras in Spišská Nová Ves with 11,500 square metres, Centro Nitra with 7,000 square metres and the Laugaricio shopping centre in Trenčín with 26,000 square metres.
The most significant projects planned for 2010 are the Eurovea project in Bratislava with 60,000 square metres of retail space, Shopping Palace II Bratislava with 34,000 square metres, Aupark Žilina with 25,000 square metres, and OC Hrad in Žilina with 19,000 square metres, the Stavebné Fórum.sk website wrote.