Supported by strong economic growth and the demand from foreign retailers to enter the market, Poland is following the Western European trend towards the development of retail parks.
A few years ago, the market was dominated by small developers who built shopping centres. “Western Europe had strict regulations about building shopping centres, so investors became more attracted to the eastern market, as it moves more quickly,” says Kinga Sistermann, head of retail at Savills Poland.
Even Poland’s biggest developers do not have many plots in city centres, because planning regulations are tight and it is expensive to gain planning permission, so they look for opportunities in smaller towns with around 100,000 inhabitants.
A number of large out-of-town schemes are in the pipeline (see table), including a 30,000m² outlet village at Targówek in Warsaw. Developer McArthurGlen Group, which owns and manages designer outlets across Europe, has teamed up with Inter IKEA Centre Group to build the outlet.
“Big developers are looking for space for retail parks,” Sistermann says. “Demand from tenants is strong, especially from listed retailers that want to expand into Poland.”
Retail sales growth over the next 10 years is set to grow by 44% in Poland, according to King Sturge. Body Shop, Guess, accessories chain Claire’s, MAC and Mothercare are among some of the recent market entrants.
Consequently, rents are rising. Rents at retail parks around Warsaw rose 17% in the year to March 2008, to €102 per m2 a year. But despite this sharp rise, retail park rents remain a fraction of high-street rents, which stand at €1,020 per m² a year.
“In Poland we have little high-street retail high streets are dominated by banks and coffee shops,” says Sistermann.
Central and eastern Europe is considered the biggest growth area at the moment and these regions remain relatively unscathed by the credit crunch, says King Sturge partner Stephen Springham.
“A lot of money had been going into these countries from the UK and German banks, and investors are now constrained in their access to capital,” Springham says. “But they are still rapidly growing markets playing catch up in their development. Poland is now the region’s third or fourth largest investment market because the large amount of development has given way to investment now. Markets are certainly not grinding to a halt.”
However, there are already some signs of a slowdown. Retail transactions in Poland totalled €244m in the first half of 2008, compared with €849m during the same period in 2007, and €1.862bn for the whole of 2007, according to JLL.
