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MAPIC, Cannes and Warsaw

Looking Beyond the Short Term - Retail Development Opportunities in CEE

Jones Lang LaSalle release new CEE Retail research report

MAPIC, Cannes and Warsaw, 17th November 2010 - Jones Lang LaSalle released today the new Central and Eastern Europe (CEE) Retail research report entitled “Looking beyond the short term”. The report reviews retail development opportunities and potential across CEE region – covering Croatia, Czech Republic, Hungary, Poland, Romania, and Slovakia.
Beatrice Mouton, Head of Retail in CEE at Jones Lang LaSalle, said: “This report outlines the current retail market situation in the CEE region after the financial turmoil, and also foresees the ways it will be formed in the future. Economies of each country, maturity of the retail markets, retailers, developers and investor’s plans are crucial factors in this respect; however, when looking beyond the short term other aspects and trends need to be taken into consideration. New retailers are looking at opportunities with tried and tested schemes where demand remains high. In these schemes, especially in the case of Poland and Czech Republic, we may see mild rental growth over the next 18 months provided that the economy remains stable.”
The report analyses the following five key issues and trends in the CEE retail environment:
Economic strength & growth potential:

The global crisis impacted all CEE markets and each found itself in a different economic situation, therefore each requires a targeted approach. With some positive economic indicators such as GDP growth forecasts, inflation levels, growing retail sales and foreign direct investment inflow, the economy in most of the CEE states is stabilising. Poland was the only EU and CEE country to avoid recession with positive GDP growth and positive retail sales performance.
Development market sentiment:

The overall sentiment towards the retail market is reasonably optimistic in most of the countries which indicates further retail development potential in the whole region. The construction of new schemes will be continued, albeit at a much slower rate. In addition, modernisations and extensions to existing, older types of shopping centres will be undertaken.
Leasing market sentiment:

Retailers remain selective in choosing locations for new stores with quality, positioning and location being the key factors. Prime shopping centres will be favoured and feature higher demand, low vacancy rates, and possible rental growth. Increasing interest in high street locations is also noticeable in Poland and Czech Republic.
Investment market sentiment:

In 2010, Poland stood out from its regional counterparts and witnessed stronger investor interest for well performing shopping centres. However, in the short to mid-term capital will return to the rest of CEE and more prime product will become available for sale across the whole region.
Long term market trends:

In the long run, it will become key to understand customers in terms of their profile and shopping habits. Customers will be an important stakeholder group alongside the existing ones i.e. developers, retailers, landlords and investors who will need to carefully research and monitor ever changing customers’ shopping preferences. Linked to this is a growing role of the internet as a shopping tool. Asset managers will need to play an important role changing the image of retail assets and proactively improving the performance of bricks-and-mortar shopping centres.
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Read Jones Lang LaSalle’s Retail Blogs from Mapic 2010