No one is safe

“Was it really plausible that Latvia could support more retail space per capita than France?” – wonders n 2009 our retail team was still busy. The retail market was one that did manage to remain stable. From the tenants’ perspective, except for a couple of bankruptcies, nothing changed significantly – leasing activity remained at a healthy level, even in countries that have been hit harder by the credit crunch. In addition to this, three large shopping centres were opened in the last quarter in Poland, Romania and Hungary: Bonarka in Kraków, AFI Palace Cotroceni in Bucharest and Allee in Budapest. All of these are now fully-leased. Retail sales are relatively stable in Poland, while there is a more fragmented picture in the rest of the CEE region, where there has been between 1 pct and 20 pct declines – but the market is now showing signs of bouncing back. There remain, however, concerns over the spending power of consumers, especially in Eastern Europe.

Another consequence of the crisis is that Central and Eastern Europe now accounts for roughly 60 pct of the 18-month pipeline, compared with app. 70 pct a year ago, mainly due to difficulties in obtaining finance.

Countries such as Russia, Romania and Bulgaria have been the worst affected by the crisis. The market sobered up somewhat in 2008 and 2009, when the realization dawned that never-ending growth is simply not possible. Was it really plausible that Latvia could support more retail space per capita than France? Elsewhere in the region, Romania was maybe trying too hard – the country wanted to achieve in five years what it took Poland and the Czech Republic 15 years to accomplish. And when the crisis finally broke, Romania found itself incapable of weathering the storm. No one is safe, however. Secondary retail projects have also been put on hold in the better performing countries, such as Poland and the Czech Republic – and it will be 2011-2013 when we will finally be able to see the full consequences of the region’s slashed pipeline. Prime projects, on the other hand, should be delivered on schedule, as there has been a clear shift to quality. The full effect of what happened in 2009 will only be revealed once the relevant statistics are published, showing us how many square metres of retail space we have lost. Lack of capital still remains acrucial issue across thesector: it has become virtually unheard of for asingle bank toagree toentirely finance alarge-scale project. This is why in 2009 wesaw only afew club deals between banks.

Nevertheless, confidence is seeping back into themarket, and weare entering