Retail property market set for surge
According to the analysis prepared by the Colliers International real estate agency, with the market launch of international brands and retail chains 50% growth of retail consumption may be forecasted in the next 10 years.
In spite of the fact that retail turnover as well as consumer trust reached its deepest point of the past five years in 2007 still the most retail space was transferred for utilization last year since 1996 in Hungary the total floor space of which has exceeded the magic 2,7 million square meters, Colliers said in a press release. Further large scale developments are made more likely by market analyses stating that Hungary is still 26% behind the average of the EU in terms of retail floor space per 1000 capita.
Shopping centers, retail spaces and international brands are growing continuously in the capital as well as in the countryside. Although the opening of the 64,000-square-meter “giant” Arena Plaza in November 2007 did not go very smoothly, it has become organized and working well by January this year even if some smaller retailers are not reaching the expected turnover but this will be recovered on long term. All its retail units have been opened (only 80% was ready on the official opening day) and Arena Plaza does not only offer the usual tenant mix of shopping centers to the customers but has helped the market entry of new players like Stradivarius, Bershka, Pull and Bear and Oysho. The flagship store of the multi-brand fashion retailer Peek und Cloppenburg and the first shop of Häagen-Dazs ice-cream franchise network were opened here – leading analyst Anita Csörgő pointed out. In addition to the 2- room multiplex cinema the shopping center is made unique by the first three dimensional IMAX movie theater in Hungary. The British real estate investment fund that bought the real estate for €390 million two months before opening hopes to make good business.
The appearance of the new competitor has not diverted Árkád owned by ECE and located only 3 kilometers from the planned handover of the next 17,000 sqm phase of the shopping center. The retail premises are already 2 or 3 times oversubscribed. The market may expand with two additional players in the next two years.
The Újbuda City Centre being built near Móricz Zsigmond Circus developed by ING is already 2 or 3 times oversubscribed. The construction of the 55,000 sqm GLA shopping center developed by R-Co at the termunis of the M3 metro line along Ferihegyi road has also been started. This project also includes the development of the transport hub of Kőbánya (bus, metro, railway stations and P+R).
Futureal has recently announced that they have managed to sell Corvin Átrium shopping center before the handover in 2010. This building is part of the largest urban renewal programs in Central-Europe with over 3,000 apartments and 150,000 sqm of office space scheduled for delivery.
Further out, the 14th district will also be enriched by a new center on the basis of the plans of a Polish real estate developer when the 60,000 sqm Mundo project is ready. In spite of the delay in the construction of underground line M4. the stop of which is planned here, the development is moving ahead. At the other end of M4 in the 11th district Futureal is planning a 35,000 sqm GLA shopping center for delivery in 2012.
Meanwhile many of Budapest’s most successful shopping centers including Mammut, West End City and Europark are approaching their teenage years. Management is encountering challenges with terms of re-negotiating the expirating leases and improving the tenant mix and staying competitive with the third generation shopping centers entering the market. The main problem for these centers is that they are tenanted predominately by retailers with smaller shop areas and high average rents. The distributors of fashion brands entering the market recently like Peek und Cloppenburg, H&M, or the Inditex Group companies however typically prefer 300 to 700 sqm stores and pay lower rents. These demands cannot be fulfilled by first and second generation shopping centers with average shop sizes of under 200 sqm. (press release)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.