Developer Orco Property Group has acquired a plot of land to build a new office building in Prague district of Vysocany with total investment estimated at 450 mln crowns and with total leasable area of 10,506 square metres.
Construction works started last month and should be completed in April 2009, the company said.
Industrial property yields in Bulgaria stood at 10% at the end of July and are expected to fall below this mark with the further development of the sector, a market overview shows.
“Only a few investment transactions have been recorded on the market to date involving relatively small distribution facilities. The yields for these deals are estimated at 10%,”, says the market overview of leading real estate company Colliers International.
Experts point out that yield levels will be compressed as a result of more investment grade transactions, which are expected to take place with the further development of the sector.
The total inventory of contemporary owner occupied and speculative industrial space
in Sofia and the region around the city is estimated at 1,200,000 m2.
Rental rents for industrial space in Sofia remains stable and continues to range between EUR 3.5 – 5.5/m2/month for prime and secondary rents.
In Varna, the third-largest city in Bulgaria, the prime rental rates have decreased slightly because of Logistics Park Varna, which forms most of the prime supply and offers warehouse space at EUR 5/m2.
More than a third of the total inventory in Sofia is located in areas close to the international airport. Kazichene and Bozhurishte, located respectively just outside the eastern and western parts of the city, are the fastest developing new industrial zones.
The forecast is for new industrial developments to concentrate in the eastern part of the city (along the Ring Road between Trakia and Hemus Highways all the way to the town of Elin Pelin) and the western part of the city (along European Transport Corridor 10).
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Slovakia’s economic success is having a positive effect on employment, wage growth and, consequently, purchasing power of local consumers. Strong increase in private consumption as well as growth in bank lending has led to higher retail sales.
Currently the country has 18 retail/shopping centres (with at least 30 tenants) and 83 hypermarkets (supermarkets with over 5,000 m2). Retail rents in shopping malls range from 15-35 euro/m2/month in Bratislava and 10-25 euro/m2/month in regional capitals. In hypermarkets the m2 rents are 7-20 euro per month.
In terms of hypermarkets Slovakia has the second highest saturation in Central Europe, after Czech republic. In Jan 2006 there were 15 hypermarkets per 1 million inhabitants. The Bratislava region leads with 150 m2 of hypermarket sales area per 1,000 inhabitants, Trnava, Trencin, Nitra and Kosice regions have 80 m2 per 1,000, Zilina and Presov regions 60 m2, while Banska Bystrica region has only 40 m2 per 1,000 people.
Until late 1990’s small independent retailers have dominated the underdeveloped Slovak retail market. By the turn of century they have given way to supermarkets and hypermarkets. Today over 75% of Slovak households do their grocery shopping in large retailers such as Tesco, Billa, Carrefour, Kaufland, Delvita, Hypernova, Metro and Lidl.
The first private retail project in Bratislava was created after the end of communism by sale of the Prior chain to US investor Kmart. In 1994 Tesco has arrived (today the largest and fastest expanding retailer in Slovakia).
SHOPPING PARK SORAVIA
The first modern shopping centre, Soravia Shopping Park, cost 14 million euro and opened in 1998, with 10,000 m2 of leasable area in the proximity of Bratislava airport.
DANUBIA SHOPPING CENTER
In 2000 Danubia SC was opened in Petrzalka, featuring anchor tenant Carrefour and 40 shops and services.
POLUS CITY CENTER (www.poluscitycenter.sk)
In late 2000 the developer TriGranit delivered Polus City Center with 180 shops and services, cinemas, bowling and a large food court. One of Bratislava’s most popular malls, the 78 million euro investment offers 40,000 m2 of leasable space.
AUPARK (www.aupark.sk)
Slovakia’s most popular shopping mall – Aupark – followed a year later (108 million euro; developer: HB Reavis). Aupark, untypically for Slovakia, doesn’t rely on an anchor tenant but offers a mixture of shops, services and entertainment, including fitness centre, squash, bowling, roulette, disco, cinemas and an extensive food court. Aupark also hosts events, festivals and competitions. It welcomes 30,000 visitors a day.
A welcomed addition in 2005 was Aulandia, an aquapark and spa, located on the top floor and rooftop of Aupark. Water attractions include pools, tubes, waterfalls, summer beach; among spa facilities are 60 massages, saunas, health treatments, ice cave, and more. (www.aulandia.sk)
This year HB Reavis will undertake an extension of Aupark that will increase the number of shops to 260, over a leasable area of 58,000 m2 (currently 43,000 m2). An office tower is also planned for 2007.
AVION SHOPPING PARK
Ikea has developed Avion Shopping Park (near Bratislava airport) in three phases. Phase I (2002, 34,000 m2) included a new Ikea store, phase II opened in 2003 and in 2006/7 an 18,000 m2 extention will increase the total leasable area to 66,000 m2 and number of shops and services to 121. The area benefits from unique tenants such as furniture and homeware giants Ikea, Kika, Hornbach as well as large sport retailers.
SHOPPING PALACE (www.shoppingpalace.sk) Created in 2004 by enlargement of the earlier Shopping Park Soravia, the Shopping Palace houses its anchor tenant, the largest Tesco hypermarket in Slovakia, as well as shops and eateries over an area of 55,000 m2. The Austrian investor, Soravia Group, plans further enlargement to 75,000 m2.
YOSARIA PLAZA (www.yosaria.sk)
The most anticipated shopping centre development is Yosaria Plaza, to be opened in 2007 after total redevelopment and extension of the communist-era OD Ruzinov department store. As a contrast to Bratislava’s American style malls, Yosaria will be the country’s first vertical shopping centre (Asian type) with 5 overground and 4 underground floors.
A 62 million euro investment, the mall will consist of 300 shops and services as well as a hypermarket, restaurants and cafes. A large relax centre will include fitness, squash, tennis court, saunas, massages, ice rink, bowling and a 25m swimming pool.
Its convenient location in the heart of Bratislava’s second largest city part Ruzinov should guarantee Yosaria’s success.
MIXED-USE SCHEMES
Responding to local demand, most of Bratislava’s new and planned A class business centres also feature retail space on the ground floor. Extensive retail space will also be part of upcoming city centre redevelopments of the main rail station (developer: IPR Slovakia) and the main bus terminal (HB Reavis), and further out in the mixed-use River Park (J&T) and Eurovea (Ballymore) projects.
In the heart of the city centre a Slovak-British investor plans redevelopment of the Tesco department store and nearby hotel Kyjev into a mixed-used project with 40,000 m2 of retail space.
HIGH STREET
Due to 50 years of communist planning Bratislava does not have a high street or main shopping area. Independent shops and signature boutiques are spread around the city centre (Old Town). Retail space in the centre is in high demand and Bratislava has seen the highest increase in retail rental values in CEE year-on-year. (Rental rates in the city centre range from 15 to 40 euro/m2/month depending on size and location.)
The most promising retail area in central Bratislava lies between Obchodna ulica (street) and nam. SNP (sq.) where Tesco department store is located. A new high-end addition to this area will be the 1,700 m2 Galeria Delta (by Cresco development).
OTHER REGIONS OF SLOVAKIA Since 2004 the shopping boom has been spreading from the capital to other areas of Slovakia. Two shopping centre brands are, in particular, undertaking a serious expansion to larger regional cities: Aupark and MAX.
Developer and investor HB Reavis is taking its successful Aupark concept to Zilina (24,000 m2 of leasable area, 130 shops and services), Kosice, Ruzomberok, Trencin and possibly Piestany.
After the first MAX shopping-entertainment centre (2004, Trnava) proved to be a winner, investor EuroMax Slovakia has added new MAX centres in Trencin and Poprad and further expansion is planned to Zilina, Nitra, Presov, Bratislava and potentially Banska Bystrica and Kosice.
Dutch investor Redema Group is building Tulip Center, a smaller shopping centre in the town of Martin (Zilina region), with 11,000 m2 of leasable area and 60 shops and services to include fitness and entertainment.
Another regional project – Centro Nitra – opened this April in Nitra with 19,000 m2 of leasable area (anchor tenant Hypernova, 65 shops, cafes). The second phase with another 9,000 m2 will be delivered in late 2006. (Total investment 40 million euro; czech developer Discovery Group)
Next year Centro Nitra will get competition from a new shopping project, CityPark (Slovak developer ICT Istroconti).
While most regional projects are rather smaller schemes with under 15,000 m2 of leasable area, one development under construction in Banska Bystrica is of a scale only seen in Bratislava: Europa Shopping Center.
Its fate will be closely watched amidst concerns whether the Banska Bystrica region (one of Slovakia’s poorest) will sustain a shopping of 32,000 m2 and 110 shops, services, restaurants, cinemas and sporting & relax facilities. Slovak developer and investor VAV Invest will deliver the Europa SC in 2007 (a 43 million euro investment). Part of the project is also a 23-storey office block (Europa Business Center), the first serious attempt at the office market outside Bratislava.
THE FUTURE
The retail boom Bratislava has seen in recent years will continue spreading into other regions of Slovakia. Several shopping centres are planned for the regional capitals in 2006/7. Meanwhile hypermarkets, continuing to expand across the country, will be built in smaller towns as well (over 20,000 inhabitants). This year Slovakia’s hypermarket sales area will surpass 500,000 m2.
With the new Yosaria Plaza as well as extention of existing malls in 2006/7 Bratislava’s retail capacity will slowly fill out. New projects sheduled for delivery by 2008/9 (Eurovea, new Main Rail Station, etc) will have a significant impact on the retail market, by strongly increasing the competition as well as attracting new retailers to Slovakia.
In spite of growing competition the increase of disposable incomes and purchasing power as well as consumer debt capacity will continue to encourage development of retail centres across Slovakia.