Retail properties – Market Report 2007/2

The year 2007 was rich in records on the market of retail properties and, within that, in the segment of shopping malls, in particular.

For the Christmas season, the largest shopping mall of the country and, at the same time, that of the region, Arena Plaza was completed, with gross rentable area of 65,000 square meters, on the territory occupied earlier by the Trotting Field. This huge shopping mall accommodates the first Budapest outlets of several brands (for instance, Pull&Bear, belonging to the Inditex Group, Behrska, Stradivarius, or Peek & Cloppenburg) and the whole of the area was rented, months before the opening. Presence in the newest and largest player of the market is an attractive opportunity, even if its location and the date of its opening were not the luckiest choices. The huge shopping mall is difficult to access by public transport, it lies halfway between two underground stations, and its completion took place in a year when retail trade turnover fell.

After a relative silence in the last couple of years, the construction of further shopping malls with about 150,000 square meters is planned or already started by the developers – e.g. Köki and Neo in Kispest, an ING project on the place where Buda Skála stood. The completions are expected in 2009-2010. Meanwhile, on the market of shopping malls in the countryside, the aggregate volume of development projects in process is of a similar order of magnitude, but there, some of these will be completed in the coming months: the shopping centre of Wallis Real Estate: Agria Park in Eger has been handed over and further completions follow in Nyíregyháza, Miskolc and Debrecen (Ã?rkád). Ã?rkád in Szeged shall open in 2009, according to the plans. In the upcoming five years, a total of 25 shopping centres shall be built countrywide.

Agria Park
Simultaneously with the completion of the giant shopping centre, there was a revival on the market of retail outlets in the inner city of Budapest as well. In addition to a total of almost 20,000 square meters of new shops in Fashion Street in Deák Ferenc utca and V1, built on the site of the ORI headquarters and including both office space and luxury homes, there are still some vacant retail outlets in the side streets of Váci utca. Like on Andrássy út as well, where rentals soared due to fee increases by owners, on the basis of the long-awaited coming of luxury brands. After Louis Vuitton, Gucci is expected to come within short, and an opening of Burberry is also increasingly probable.

In 2007, important completions were made in the outskirts of the city as well. Next to the airport, Market Central Ferihegy was built by AIG, with 44,000 square meters – fully rented out already several months prior to its opening. At the western gate of Budapest, the last phase of Premier Outlets Center (6000 sqm) was accomplished and it became similarly popular to the first two phases. In its immediate neighbourhood, M1 Outlet Center (16,500 sqm) can be opened within month. This is intended to be a mix of a traditional factory outlet center and of a classic shopping centre. In the framework of the Tópark development project at Törökszentmiklós, a 100,000 square meters shopping centre shall be ready by 2010 according to the plans, and Solaris at Budaörs shall also enter the market with a significant size of retail premises.

As to rental fees, the most marked change could be observed in the case of retail properties on Andrássy út. Their monthly rental fees came up from the previous levels of 25-35 euros, one year ago, to the level of 40-60 euros, already earlier usual in the area of Váci utca. The prices in the other market segments did not change that much. In the most favoured shopping centres the average monthly fee per square meter is 100 euros, in shopping centres on the outskirts of the city, an average of 20 euros is required.

Read further details and the full report here.