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EX DING BORDERS RETAIL MARKET IN 13 CEE COUNTRIES ENTERTAINMENT & LEISURE SECTOR NOVEMBER 2019 RETAIL MARKET IN 13 CEE COUNTRIES INTRODUCTION Nothing beats watching a good movie at a big screen cinema while digging into an oversized box of popcorn, right? Maybe instead you would prefer to go for a work-out, a yoga class or a nice relaxing sauna? Or perhaps you need some alone time to pick up some things that you need but have no one or nothing to keep the kids entertained? Well, across the CEE region there are so many opportunities to do all of these things and much more. But where? In our latest report, we take a look at the types of entertainment & leisure on offer in shopping centres across 13 CEE countries (Albania, Belarus, Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Ukraine). The findings clearly indicate that the entertainment industry is one of those that has been developing dynamically over the last several years. Shopping centre developers and owners are increasingly aware that an innovative and attractive entertainment offer is an indispensable part of each shopping centre, regardless of its geographical location. The entertainment market in shopping centres are dominated by multiplex cinemas and fitness clubs, but there are also other concepts that are being added to the mix. These include concepts such as kids play centres, dance studios, bowling, escape rooms, trampoline parks, wellness centres and casinos to name just a few. We hope you find this an interesting read! AUTHORS Kevin Turpin Dominika Jędrak Silviu Pop Regional Director Director | Research and Head of Research | Romania of Research | CEE Consultancy Services | Poland +40 721 176 701 +420 606 725 032 +48 666 819 242 [email protected] [email protected] [email protected] 2 COLLIERS INTERNATIONAL | NOVEMBER 2019 CONTENTS 2 INTRODUCTION 4 GENERAL DATA 6 ECONOMIC OUTLINE OF THE CEE COUNTRIES 10 CHARACTERISTICS OF THE ENTERTAINMENT & LEISURE SECTOR AND COMMENTS 26 CONTACTS 3 RETAIL MARKET IN 13 CEE COUNTRIES GENERAL TALLINN DATA RIGA VILNIUS MINSK POLAND 1 39 2 5.1 3 3.8 4 1.1 5 380 6 1,172 13 COUNTRIES 7 17.89 WARSAW CZECHIA KYIV 1 6 2 2.9 3 1.9 4 2.1 PRAGUE 5 407 MILLION PEOPLE 6 1,263 155.4 7 38.23 BRATISLAVA SLOVAKIA 1 2 CITIES OVER 100,000 2 4.1 3 5.4 BUDAPEST 4 2.5 INHABITANTS 5 430 156 1,023 6 7 22.46 ZAGREB CROATIA BUCHAREST 1 4 BELGRADE 2 2.7 LEGEND 3 7.1 1 No of cities over 100,000 inhabitants 4 1.7 5 372 2 GDP growth 2017/2018 (%) 6 1,144 3 Unemployment 2018 (%) Capital City 7 7.48 SOFIA 4 CPI 2018 (%) 5 Minimum net wage 2018 (EUR) 6 Average monthly gross salary in enterprise sector 2018 (EUR/month) Population 7 Average monthly total expenditures for recreation and culture per capita 2018 (EUR/month) TIRANA 4 COLLIERS INTERNATIONAL | NOVEMBER 2019 ESTONIA 1 1 2 3.9 3 5.0 4 3.4 TALLINN 5 516 6 1,341 1.3m 7 8.6 LATVIA 1 1 2 4.8 3 6.5 LITHUANIA 1.9m RIGA 4 2.5 1 4 5 352 2 3.4 6 1,036 3 5.7 7 35.6 4 2.7 5 396 2.8m 6 1,263 VILNIUS 7 20.2 BELARUS MINSK 1 15 2 3.0 3 4.8 4 4.9 m 5 120 9.5 6 463 7 8.6 38.4m WARSAW KYIV UKRAINE 1 37 2 3.3 PRAGUE m 3 9.2 42.2 4 9.8 5 123 10.6m 6 382 7 5.53 5.4m BRATISLAVA SLOVAKIA 1 2 HUNGARY ROMANIA 2 4.1 1 8 1 23 3 5.4 BUDAPEST 2 4.9 2 4.1 4 2.5 3 3.4 3 4 5 430 4 2.9 4 4.6 6 1,023 9.8m 5 300 5 267 7 22.46 6 1,100 6 1,073 ZAGREB 7 13.2 19.5m 7 8.7 4.1m BUCHAREST BELGRADE BULGARIA 1 6 2 3.2 3 4.4 SOFIA 7.0m 4 2.7 5 286 6 617 7 11.9 ALBANIA TIRANA 1 10 2 4.2 3 12.1 4 2.0 2.9m 5 215 6 422 7 12.66 5 RETAIL MARKET IN 13 CEE COUNTRIES ECONOMIC OUTLINE OF THE CEE COUNTRIES The CEE region is quite a heterogenous group of countries when you compare one country with another, but when viewed alongside other regions of the world, it is in a league of its own. Despite its small size, in terms of population, the CEE region as a whole is one of the most successful growth stories globally. According to the IMF, just 13 of the ca. 170 developing economies in the 1990s have achieved developed status, 8 of which are EU members and 5 are covered in this report – Czechia, Slovakia and the 3 Baltic states (it is probable that the likes of Poland and Hungary are not too far behind). The rest other CEE countries are hot on their heels. On the contrary, the mix of low wages relative to developed countries, good technical and language skills as well as an interesting geopolitical position, which have helped propel some countries forward, should work as similar advantages for those lagging behind. Just to give one of the most compelling arguments: when plotting the change between 2000 and 2019 in GDP/capita adjusted to purchasing power parity (a proxy for living standards) relative to the level of Germany – so the data can highlight actual improvements – three countries we feature here are among the top 10 of over 190 states included in the IMF’s World Economic Outlook database (Lithuania, Latvia and Slovakia, with Lithuania the 3rd overall best performer in the world, after Singapore and Ireland), with 5 other countries between the ranks 11 and 20 (Estonia, Romania, Poland, Bulgaria and Belarus). The others follow not too far behind, but all of them are in the top one-third globally. So it would be safe to say that the CEE is, alongside emerging Asia, a growth champion of the world, with more of this likely to follow in the next decade. 6 COLLIERS INTERNATIONAL | NOVEMBER 2019 The growth rate GDP/capita in CEE region 80 70 60 50 40 30 20 10 % Latvia Czechia Estonia Poland Croatia Belarus Albania Ukraine Lithuania Slovakia Hungary Romania Bulgaria GDP/capita (PPP terms of Germany's level) Change in GDP/capita (PPP terms of Germany's level) in percentage points 2000-2019 Source: IMF, Colliers International GDP growth in CEE region 5 4 3 2 1 % Latvia Albania Ukraine Estonia Poland Czechia Croatia Belarus Romania Bulgaria Slovakia Hungary Lithuania Advanced economies GDP growth (2015-2019 average per year) GDP growth forecast (2020-2024 average per year) Source: IMF, Colliers International CPI in CEE region 25 20 15 10 5 % Latvia Ukraine Belarus Poland Albania Estonia Czechia Croatia Hungary Romania Bulgaria Lithuania Slovakia CPI (average 2015-2019) CPI (average 2020-2024) Source: IMF, Colliers International 7 RETAIL MARKET IN 13 CEE COUNTRIES Population & unemployment rate in CEE region 45 16 40 14 35 12 30 10 25 8 20 6 15 10 4 5 2 MLN % Latvia Ukraine Poland Czechia Belarus Croatia Albania Estonia Romania Hungary Bulgaria Slovakia Lithuania Population (2019) Unemployment rate (%, 2019) Source: IMF, Colliers International GDP in PPP terms in CEE region 1400 1200 1000 800 600 400 200 USD bn Latvia Poland Czechia Ukraine Belarus Croatia Estonia Albania Romania Hungary Slovakia Bulgaria Lithuania Source: IMF, Colliers International Industrial confidence indicator vs. Ifo business climate 15 10 5 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 -5 -10 -15 (deviation from historic averages) -20 -25 -30 CEE-6 average industrial condence indicator Ifo business climate indicator for Germany (6 months lead) Source: Eurostat, Ifo, Colliers International 8 COLLIERS INTERNATIONAL | NOVEMBER 2019 Changes in consumer behaviours and preferences are leading to an increase in the entertainment segment within shopping malls. Fun concepts are increasingly becoming a key element of a thriving mall. Shopping malls are trying to increase the amount of time customers spend in them, and as a result there is a growing trend in entertainment." Nuccia Kos Senior Consultant I Commercial Real Estate Advisory and Agency Services | Croatia The Slovakian market for entertainment operators within the shopping centres remains stable both in terms of the number of operators and average market rents. No major entries are expected in the near future. The tenant mix of a dominant shopping centre within a first-tier city would normally include a cinema, fitness centre, kids’ entertainment centre and other entertainment facilities (e.g. game centre, a bowling, ice rink, etc.) (…) Currently, Golem fitness remains the only operator to demonstrate stable success within the segment.(…) In terms of cinema operators, dominant shopping centres normally choose between one of the two largest international operators – Cinema City or Cinemax. Interestingly, upon the completion of the Eurovea extension in Bratislava, the scheme is planning to have both operators within one shopping centre. Some shopping centres in second and third tier cities’ are opting for the local operator Ster Century Cinemas." Tamila Nussupbekova Associate | Research | Slovakia 9 RETAIL MARKET IN 13 CEE COUNTRIES CHARACTERISTICS OF THE ENTERTAINMENT & LEISURE SECTOR To implement innovative leisure and entertainment concepts is quite a challenge and requires a change of attitude towards running a business in the shopping centre sector and understanding the role of this kind of feature.