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Foreign retail – upward trend

Foreign retail – upward trend Prepared by Petr Palicka, Managing Director CONTENT Retail market overview Europe x Czech Republic Market situation overview – generally, year 2005 Property investments Retail market expectation in the next 2-3 years Retail market analysis & research

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Foreign retail – upward trend

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  1. Foreign retail – upward trend Prepared by Petr Palicka, Managing Director

  2. CONTENT • Retail market overview Europe x Czech Republic Market situation overview – generally, year 2005 Property investments • Retail market expectation in the next 2-3 years • Retail market analysis & research • Bovis Lend Lease retail projects

  3. Retail market overview - Europe • The area of Shopping Centres in 34 European countries in continuous growth Total shopping area 100 mil sqm average 166 sqm / 1,000 inhabitants New shopping area 2005 - 5,5 mil sqm 2006 - 7 mil sqm • Countries with the largest shopping area UK 14 mil sqm (232 sqm / 1,000 inhabitants) France 13 mil sqm (220 sqm / 1,000 inhabitants) Germany 11 mil sqm (132 sqm / 1,000 inhabitants) • Countries with the lowest standard of shopping Bulgaria, Malta, Bosnia

  4. Retail market overview - CR – General overview • Market situation is strongly influenced with hyper & supermarket chains High amount of hypermarkets & supermarkets on the market Highly competitive atmosphere, price increase stagnation • Continuous increase of shopping malls´ popularity 10 SCs with more than 100 tenants, over 30 SCs with over 50 tenants Hypermarket tenant in CS still as the main attraction for the customers Increase trend of entertainment area in shopping malls (Cinemas, wellness, ice-rings, pools, etc.) • Customers´ behavior Insist more on goods´ quality and comfort during shopping, shopping becoming a time of enjoyment and connected with entertainment, more time spent in individual BU than in hyper & supermarkets • Significant modification of the suppliers´ structure Goods imported from EU countries  Czech producers export to EU countries

  5. Retail market overview - CR- year 2005 • The area of Shopping Centres increased up to 20% (212,000 sqm) Total shopping area is 1,35 mil sqm = 132 sqm / 1,000 inhabitants CR is still behind c. 20% in comparison to EU countries Prague itself over-rises the EU average of 40% (32% of total area in CR) • Each regional City has at least one SC in EU standard • New Shopping Centres opened, others undergone area enlargement 3 new SCs in Prague (OKC Eden, Galerie Butovice, Centrum Chodov) Not all of them must be successful – location is an important factor • New trend in SCs placement Instead of cities´ periphery (to attract also non-city inhabitants) the City centres again wanted (eg. new SCs Vankovka in Brno, Palladium in Prague to be opened in 2007)

  6. Property investments in Retail – CR - 2005 • The retail property market continues to be very active • Retailer demand remains strong, in particular for key high street locations, increasing demand for new Shopping Centre space – especially for BU in Shopping malls • A number of new in-town SC developments are due for completion in the next two years. Out-of-town SC to be modernized to compete. • High demand on investment funds, yields 7-6,5% • Region investment split Investments are not targeted only to Prague region Prague – high street, wider city centre, borders of City centre Regions – Bohemia (Middle, North, West), Moravia (North, South)

  7. Property investments in Retail – CR - Major investments/deals 2005 • Sestka, Prague 6-Ruzyne size 32,000 sqm price € 70 mil yield 7,50% • AGY Centrum, Ceske Budejovice size 30,000 sqm price > € 45 mil yield 7,50% • Arcady Pankrac, Prague 4 size 36,000 sqm price c. € 72 mil yield confidential • Nove Butovice, Prague 5 size 46,000 sqm price € 100 mil yield 8,25%

  8. Retail market expectation for the next 2-3 years • Expectation of the new international retail chains entering the market • Successful penetrations to the market expected a) Non-food segments fashion, shoes, furniture, etc. b) Food segment mostly in small cities, non Prague region • Expansion strategy option new products & formats sensitive approach with local modifications • Increase of shopping area to achieve EU average New SCs to be build and opened – up to 160,000 sqm in 2006

  9. Number of retail units in SC in CR – Top 12 Books Clothes / fashion / textile Shoes / leather goods Sport / Toys Jewellery / Watches / Presents Electronics / PC tech Food Flowers Furniture / carpets / soft furnishing Tobacco / newspapers Hypermarkets Drugstore / cosmetics Product category split,data from January 2006

  10. Customers´ visit of BU at the shopping centre Hypermarket Mall Restaurants Cinemas/Fitness Services

  11. Raising popularity of the Shopping Centres >5 hrs 3-4 hrs 2-3 hrs 1-2 hrs < 1hr Time spent in the favorite shopping centre during the last visit (hours)

  12. The most visited Shopping Centres in Prague often rare Myslbek Globus Zlicin OC Letnany Metropole Zlicin Novy Smichov C. Cerny Most Hypernova Pruhonice Avion Zlincin Palac Flora Park Hostivar Share of Prague households (%), Explanation – rare x often visits

  13. Top 10 Retail chains In terms of turnover, data from 2004)

  14. Area in sqm / 1,000 inhabitants 50 70 90 110 130 Hypermarkets´ Shopping area - Regional split

  15. Development of hypermarkets in CR Number of super and hypermarkets, data from January 2006

  16. Bovis Lend Lease –Retail & Leisureprojects Olympia Shopping Centers-€162 mil. total for 6 centers Asko Furniture – Brno, Teplice MIXED USE Slovansky Dum, Prague - € 36.7 mil. SC Centrum Chodov – € 106 mil.

  17. Bovis Lend Lease –Retail & Leisure projects Tesco Stores , 4 stores, Czech Republic Ster Century Cinemas, 6 projects, Czech Republic CentroZlin SC, Zlin Ahold Hypermarkets – 7 stores, Czech & Slovak Republic

  18. Bovis Lend Lease – Centrum Chodov Completion 06/04 - 11/05 Lease-able area 55 000 m2 # BU 210 Parking    2 509 spaces BLL role Project Management

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