We stand for Retail Retail Market Report Austria |2019 We stand for real estate. Preface The continued shift in consumer behaviour and the high volume of retail space combined with steady growth in online competition have created a challenging market environment for retail properties. However, challenges frequently also create opportunities for developers, investors and retail chains which must find the right answers to this new market environment. Michael Ehlmaier FRICS The experienced EHL retail team is ready to accompany you on this very Managing Partner interesting and promising course with its know-how, detailed market EHL Immobilien GmbH knowledge and creative solutions. Shopping centre operators can no longer rely on tried and tested concepts and a well-known tenant mix for their success. What is needed are innovative concepts that make the shopping centre a real experience Stefan Wernhart MRICS for customers and a place to visit with family and friends. Managing Director EHL Gewerbeimmobilien GmbH More gastronomy and a wider range of activities like indoor playgrounds and other sport facilities have become just as indispensable as a unique offering for shoppers. All this requires not only courage, but also investments on the part of operators – but both will definitely pay off over the long-term because innovative concepts are the way of the retail future. The successful repositioning of numerous retail properties and the successful market entry and roll-out of new retail chains underscore the quality of our comprehensive consulting and services. Jörg F. Bitzer MRICS We would be happy to advise you and help you take off to a new direction. Head of Retail Properties EHL Gewerbeimmobilien GmbH Overview Retail Market Vienna Executive Summary The new gastro boom Prime rents in Vienna under the global Top 10 Shopping is no longer the only reason for a trip to the store, dining out is playing an increasing The concentration on absolute prime locations – in important role: The percentage of gastronomy space this small market segment – has been responsible in shopping streets and centres is growing. System for a series of rental price records. Square metre gastronomy, in particular, is ready and able to match rents of up to EUR 400 on Kohlmarkt and part of the square metre rents paid by retailers and is Graben (both in the First District) again place Vienna looking for more space than ever before. in the Top 10 of the global rent ranking. Production of space in Vienna Online and east competition benefit trending towards zero from the Sunday opening ban in Vienna The demand for space in Vienna appears to be 24/7 “opening hours“ in online retail and top offer- satisfied for the time being. Only 9,000 sqm were ings in the neighbouring countries to the east make placed additionally on the market in 2018, and the Vienna’s restrictive Sunday opening regulations a trend is pointing downward. In comparison with the growing problem for the local retail trade. The result increasing volume of space that is being removed is a substantial outflow of purchasing power to from the market, this means a steady decline in the Austria’s neighbours and the Internet. selling space per capita. More and more alternative concepts for Further increase in tourism revenues in ground floor space Vienna and Salzburg There has been an increase in the range of alternative Tourism remains the bright spot for Brick & Mortar uses for space at weaker locations. In addition to retail. Revenues from city tourism are becoming the “conventional“ warehouses, offices and student progressively more important for shops in good and housing, the market is also seeing a greater number of very good locations, above all in the booming city medical facilities, day care centres and other services. destinations of Vienna and Salzburg. Important market indicators Creative newcomers Economic Data Austria 2019 Unemployment rate (Eurostat) Austria 4.6 % The top dogs are thinning out their branch networks EU (28) 6.6 % but, at the same time, a growing number of new and Nom. GDP EUR bn. 402.07 creative concepts are entering the market. Austria Economic growth 2.0 % remains one of the most popular expansion targets Inflation 2.1 % for international retailers. State budget 0.4 % Austria 40,369 EUR GDP per capita EU (28) 32,013 EUR Purchasing power per capita (2018) Österreich 23,282 EUR Source: Austrian Federal Economic Chamber | GfK 3 Retail data Austria Facts and Figures at a Glance Revenue development in Brick & Mortar retail 2008—2018 4.0 % 3.0 % 2.7 2.0 % 2.1 2.0 1.8 1.0 % 1.3 1.2 1.2 1.1 1.0 1.1 0.9 0.2 0 0.4 0.3 0.6 0.3 -0.5 -0.9 -1.0 % -1.1 -0.3 -1.0 -1.7 -2,0 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The development of revenues in Brick & Mortar retail includes food retailing based on the Nielsen reveneue barometer (preliminary values). The price adjustment for the real revenue development was based on a Statistik Austria branch deflator. Changes nominal and real in per cent vs. previous year Source: KMU Forschung Austria | Statistik Austria Annual expenditure on gastronomy per inhabitant in EUR Switzerland Austria Norway Italy Sweden Germany Belgium Spain Turkey France Portugal Finland Slovenia Slovakia Czechia Hungary Poland Bulgaria Croatia Russia Montenegro Macedonia Serbia Albania Bosnia and Herzegovina 0 500 1.000 1.500 2.000 2.500 3.000 Source: RegioData Konsumausgaben 4 Top-Seller in online shopping 30 Clothes / Textiles 10 26 Books / Magazines 16 23 Electronic devices 12 15 Shoes / Leather goods 2 13 Sporting goods 5 12 Toys 4 11 Cosmetics / Perfume 2 11 Music (CD / DVD / Download) 10 10 Furniture / Home decoration 2 8 Computer hardware 7 7 Tools / DIY 2 7 Computer software 7 6 Watches / Jewellery 2 6 Food / Beverages 2 5 Products for pets* 4 Glasses 1 CARD 0002 0003 0004 0005 0 5% 10% 15% 20% 25% 0002 000330% 0004 * Note: Product group not researched in 2006. Online shopping for selected product groups. 2006 2017. Share of Austrians (16-74 years, in %). Source: KMU Forschung Austria MONEY PAY COLLECTION E-Commerce-Study Austria 2018 | Consumer behaviour in distance selling 11% + 100,000 = 2% Shopping via distance selling 5.0 mln. shop via distance + 300 mln. Euro = 4% of total, retail • mail order shopping selling 7.9 bn. Euro relevant consumer • Online shopping = 67% of Austrians Shopping expenditures in spending • Online shopping via (ages 15 and up) Austria and abroad smartphone Source: KMU Forschung Austria Number of Brick & Mortar shops decreasing – number of online shops increasing 47,800 44,500 41,600 37,400 7,500 9,000 5,700 3,200 2006 2010 2013 2017 2006 2010 2013 2017 Brick & Mortar shops Online shops Source: KMU Forschung Austria 5 © Jake Sudgen © Mikko Hietanen / Shutterstock.com Revenue Killer: Sunday Opening Hours Fans of travel on the Danube River will undoubtedly lost a significant part of their revenues due to the have a reason to celebrate with the start of spring restrictive Sunday opening hours in this country. And season in 2019. The Vienna-Bratislava route will now forecasts point to an increase in this trend. be serviced by a new Twin City Liner, which can carry twice as many passengers as its predecessor. Three developments underscore the fact that the general ban on Sunday opening does not lead to a Vienna’s retailers will most likely be less enthusi- shift in sales to Monday, but to a general loss for astic: Sunday by Sunday many Vienna residents Austrian retailers: and, above all, thousands of well-off, shopping-savvy tourists use the catamaran as well as specially •Competition from the Internet: Online shops are also organised bus trips for a shopping spree in the open on Sundays. A simple mouse click allows con- Slovakian capital – and these numbers are expected sumers to also shop on Sunday, instead of waiting for to increase in the future. Most of the passengers are a day when the stores are open. Sunday is becoming less interested in the beauty of historical Bratislava a very popular day for online shopping, above all than in the offerings in the modern shopping centres because of the substantial amount of free time. In and stylish shopping streets of the Slovak capital. addition, online shops frequently use special rebates on Sundays to generate even more revenues. “A Sunday trip to Bratislava has •Easy-to-reach shopping facilities in the neighbouring countries: Increasingly stress-free and faster travel to already become a fixed point the attractive shopping centres across Austria’s bor- in the programme of many ders make these alternatives even more appealing, in particular for consumers from the greater Vienna area. international tour operators.“ •Booming city tourism: The record number of tourists who, as a rule, only book very short city trips is The expansion of river travel as well as the improve- becoming a more important factor for the retail trade ment of other traffic connections to the east have in comparison with domestic customers. The ban again moved a recurring issue into the centre of on Sunday opening disregards this significant and attention: Domestic retailers – especially in the steadily growing revenue driver and, instead, directs weekend tourism hot-spot Vienna – have always this income to Austria’s eastern neighbours. 6 A Window to the Future The no-shopping Sunday therefore also has an indirect effect on the market for retail properties. The few winners include The following megatrends will influence shop space for travel necessities, like books and newspapers, the shopping centre retail trade in the at railway stations and individual locations where, for example, future and should be reflected in the supermarkets are also allowed to open on Sunday.