retail market norway q4 2017 2 3 contents summary 5 highlights 7 the retail market norway 9 key areas, oslo 12 footfall 18 investment 22 shopping performance 25 shopping centres 26 food & beverage 29 data and figures 31 about colliers 34 Retail Market Report Norway Retail Market Report Norway 4 5 summary Haakon Reed-Larsen Head of Retail Colliers International Norway In recent years, retailers have increasingly looked at Norway as an attractive market for expansion. Despite the decrease in the petroleum industry and the implications this still has for the Norwegian economy, the Norwegian retail market is still performing relatively strongly. International retailers presence in Norway is currently low compared with other European countries. Despite many strong domestic brands, there is still a strong appetite from Norwegian consumers for new international retailers/ brands from around the world. Colliers International in Norway have the last 20 years had a strong focus on advising our clients within the Retail sector, as is the strategy for Colliers Globally. We hope this Retail report will give a valuable market input to our clients and potential clients, highlighting our strong competence within advising tenants on finding the right space and terms to open new stores, advising owners of shopping centers of new concepts on the footstep to Norway and helping owners of vacant retail space to find the right and best tenants. Our focus is all types of retail business, but I would like to put focus on our strong competence within F&B and International Fashion Retailers. Colliers are here to help you to make the right and qualified decisions! Retail Market Report Norway Retail Market Report Norway 6 7 highlights 2017 salary The average Norwegian salary for all employees is EUR 55 044 per year. home renewal Norway´s capital The average Norwegian household Oslo, offers a variety spends approx EUR 3 500 per year on of shopping. 1, 5 million home renewal (decoration, furniture, people live in the Oslo appliances etc.) region. shoes & clothing shopping habbits The average Norwegian household More than 35 % of all retail spends approx EUR 2 200 per year on sales in Norway take place in shoes and clothing. shopping centers transportation 70 % of all households have a car and almost a quarter have two cars unenployment 4,2 % amongst the lowest unemployment rate in Europe Retail Market Report Norway Retail Market Report Norway 8 9 macro economy norway The Norwegian economy is recovering well from the effects that the NOK will increase against most other currencies CPI of the oil downturn and the scarce growth in global demand. going forward in 2017 and especially in 2018. However, the Norwegian economy continues to be heavily reliant on the petroleum business and the “oil-fund” continues CPI to support a growing portion of the Norwegian fiscal budget. The CPI rate continuously surprised on the “upside” in 2016 as ended at 3.6 %, which was well above comparable data The economic downturn has now lasted for the better part for other Western European countries as well as way above three years. However, it is becoming increasingly apparent estimates from the start of the year. that the tide has turned and that Norway is set up for strong However, the rate has dropped quite significantly in 2017 and economic growth going forward. Most experts in the field as it is currently around 1.5 %. The estimation for the end of the well as new data that is continuously coming in support this year is close to 2 %, which is far below the figure from last view. year. The expected GDP growth for 2017 is 1.8 % which is expected UNEMPLOYMENT to grow further to 2,4 % in 2018 and draws a very positive The unemployment rate is as of the start of October 4,2 % UNEMPLOYMENT image for the Norwegian economy. 2016 numbers showed a which is a steady decline since the turn of the year. The growth of 0.9 % in comparison. Other sources and experts overall trend is that the unemployment rate will continue to are frequently suggesting even higher growth in the coming decrease going forward, although at a rather slow pace. years. This underpins the perception that the Norwegian Economy has picked up the pace and that there are exiting This is due to factors such as a recovery in within the times ahead. petroleum sector as it is expected that the investment will bottom out in 2017. Also, the cost of developing an oilfield CURRENCY has sunk by 40 % compared to 2014. Also, mainland Norway The Norwegian NOK has in general been somewhat is projected to perform quite well in the year of 2017 in terms strengthened by the improving oil price and macro conditions. of investment and also a slight increase in exports. At year-end, the NOK was trading at roughly 9 against the € Euro and even below, which was for the first time in roughly The unemployment rate is expected to stay at the current 2013 (%) 2014 (%) 2015 (%) 2016 (%) 2017 (E´) (%) 2018 (E´) (%) 2019 (E´) (%) 2020 (E´) (%) 18 months. However, the NOK has decreased somewhat and level during the course of 2017 and further down into 2018 SOURCE as of mid-October, is currently trading at levels around NOK and 2019. Statistics NOrway 9.35 per 1 € Euro. GDP, MAINLAND 2,3 2,20 1,10 0,80 1,80 2,40 2,20 2,10 OILPRICE GDP 1,0 1,90 1,60 1,00 1,50 1,90 1,80 2,00 Furthermore, although not at peak levels, the NOK is currently The oil price increased quite considerably from the end of CPI (JAE) 1,60 2,40 2,70 3,00 1,70 2,00 2,00 2,00 very weak compared with the USD $ when reviewing it in a 2016 and has since remained between $ 50 and $ 60 per historical perspective. This is in part fueled by the Americans barrel. At the time being (medio October) the oil price is HOUSEHOLD CONSUMPTION 2,70 1,90 2,10 1,60 2,20 2,60 2,30 2,10 increasing their interest rates twice within a relatively short hovering around $ 55 - 60, after a recent increase after the PUBLIC CONSUMPTION 1,0 2,70 2,10 2,30 1,70 1,70 1,90 2,50 summer. period of time, as well as “Trumpism”, in addition to a INVESTMENTS (OIL & GAS) 19,3 -3,20 -15,0 -14,70 -7,0 -0,10 6,20 1,90 generally weak NOK. After OPEC and other major oil producing countries has EXPORT -1,70 3,10 3,70 1,2 0,50 2,00 2,20 3,10 engaged in several agreements as of late, the oil price is Before the recent fall of the NOK in the past month, an increase EXPORT (OIL & GAS) -5,50 1,90 3,2 3,80 0,40 -0,10 -0,10 1,60 was widely expected. Going forward, the road a head seems according to most experts within the field, likely to continue somewhat uncertain. Our main scenario however, remains to increase throughout 2017 and beyond. EXPORT (TRADITIONAL GOODS) 1,30 3,1 5,80 -8,20 2,20 4,00 4,10 4,40 IMPORT 4,90 2,40 1,630 0,30 2,50 2,20 2,90 2,70 IMPORT (TRADIOTIONAL GOODS) 2,30 2,10 1,90 -0,60 1,50 3,10 4,20 3,60 GDP Mainland UNEMPLOYMENT 3,50 3,50 4,40 4,70 4,40 4,20 4,10 4,10 EMPLOYMENT (*LEVEL) 71,2 71 71,2 70,7 70,4 70,5 70,6 70,8 HOUDEHOLD (DISPOSABLE INCOME) 3,80 2,70 5,20 -1,60 2,00 2,10 1,90 2,00 HOUSEHOLD (SAVINGS RATE) 8,2 10,4 7,1 7,4 6,8 6,40 6,20 MONEY MARKET (RATE LEVEL) 1,80 1,70 1,30 1 1,00 1,00 1,10 1,40 CONSUMER PRICE EURO AREA 1,30 0,40 0,10 0,30 1,60 1,70 1,80 1,90 SALARY 3,90 3,10 2,80 1,70 2,30 3,10 3,10 3,19 RESIDENTIAL PRICES 4,0 2,70 6,10 7,10 6,50 0,60 -1,50 -2,10 CPI 2,10 2,0 2,10 3,60 2,00 2,10 2,20 2,30 Retail Market Report Norway Retail Market Report Norway 10 11 We are already seeing this in a highly competitive area such the retail market norway as Bærum and Asker where shopping centres Trekanten and Rortunet are ready for considerable expansion in order to better compete within this market. We expect other shopping centres to make similar decisions going forward. The traditional retail format is continuously under heavy scrutiny from the ever-growing e-commerce. Lately there Norway is currently one of the countries in the world with the has been several reports of shopping centres in the Unites highest density of shopping centres compared to inhabitants. States, which has been deserted in recent years due to new This is due to several factors, such as the weather and ways of doing and thinking of shopping. Al though generally Norwegians´ appetite for convenience being a few of several not to the same extent as we see in the US, this is also taking possible explanations. Consequently, the sheer amount of place elsewhere in the world, such as Norway. Shopping Centres and the strong competition because of that in the Norwegian market ensures that landlords has to In the context of the Norwegian shopping centre market, we address the issue of more e-commerce in order to survive.