New developments booming

in pan-regional cities

Baltics Retail, H2 2016/Q1 2017

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 1

69,500 sq m2,09 million sq m

KEY POINTS

•

•

•

Figure 1: Shopping and Leisure Centre Kvartal in Tartu, opened in 2016

•

•

Credit: Tartu Tarbijate Kooperatiiv

*Arrows indicate change from the corresponding period in the previous year

6.65%-7.0%341.2 6.0%-6.5%

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 2

BALTICS RETAIL

SHOP P ING CENTR E SUP P LY

COM P LETIONS ABOVE 10,000 SQ M

ESTONIA

Figure 4: New stock deliveries and expansion of existing centres

with a GLA above 10,000 sq m (2015-2017F), GLA sq m

Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

Figure 3: Total SC Stock with a GLA above 10,000 sq m by Country and

Volumes Currently Under Construction, %

Source: Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

Figure 2: Shopping Centre Densities in CEE Region Capitals, SQ M per 1,000 population (Traditional Shopping Centres* with GLA above 5,000 sq m)

*Only traditional schemes above 5,000 sq m of GLA included (according to ICSC-Classification)

Source: CBRE Research, Gfk Incoma Oxford Economics, Q1 2017

0

5 000

10 000

15 000

20 000

25 000

0

100

200

300

400

500

600

700

Czech

Republic

Hungary Poland Romania Slovakia Bulgaria Croatia Estonia Latvia Lithuania Russia Serbia Ukraine Austria

Purc

hasi

ng p

ow

er (E

UR/ ‘0

00

apita)

Density (

sq m

/ ‘0

00

capita)

Shopping centre density Purchasing power/ '000 capita

Figure 5: New Shopping Centre Stock 2015 & 2016 and Stock

under Construction in the Baltics

Source: Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

0

50

100

150

200

2015 2016 2015 2016 2015 2016

Estonia Latvia Lithuania

sq m

Capital Pan-regional UC Capital UC Pan-regional

60 500

46 300

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

Estonia Latvia Lithuania

New

deli

verie

s,G

LA

, s

q m

2015 2016 2017f

0

200 000

400 000

600 000

800 000

1 000 000

Estonia Latvia Lithuania

Tota

l sto

ck, s q

m

Existing Stock, sq m Total U/C, sq m

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 3

BALTIC RETAIL

L I THUANIA

Project Country City New GLA, sq m Total GLA of the whole project, sq m

Mustamae centre Estonia Tallinn 13,500 13,500

Arsenal Centre Estonia Tallinn 12,000 12,000

Kärberi keskus Estonia Tallinn 5,500 5,500 (not included in the stock > 10,000 sq m)

Kvartal Estonia Tartu 35,000 54,650

Parli SC Estonia Maardu 6,500 6,500 (not included in the stock > 10,000 sq m)

MEGA expansion Lithuania Kaunas 22,500 82,500

NORDIKA, 2nd stage Lithuania Vilnius 20,100 35,400

Domus PRO, 2nd stage Lithuania Vilnius 3,700 11,200

Figure 6: New stock deliveries and expansion of existing centres with a GLA above 5,000 sq m | 2016

Source: Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

LATV I A

E-COMMER CE IN THE BALTICS

SHOP P ING CENTR E R ETAI L SALES

(TUR NOVER S)

INFLATION AND R ENT R ATES

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 4

BALTIC RETAIL

Figure 7: Turnover Growth to Continue in 2016; 2012-H2 2016

*Data for VILNIUS are not available

Source: Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

Figure 8: Number of Visitors* in the Leading Shopping Centres,

Change, %, y-o-y

*CBRE Baltics estimations

**data for VILNIUS are not available

Source: Source: CPB Real Estate Services, part of the CBRE Affiliate Network, January 2017

Figure 9: Retail Sales via Mail Order Houses or via the Internet,

Change, %, hy-o-hy

Source: CBRE Baltics, according Statistics Lithuania, Statistics Latvia and Statistics Estonia,

Q1 2017

-50%

0%

50%

100%

150%

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2

2010 2011 2012 2013 2014 2015 2016

Latvia Lithuania Estonia TOTAL

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2011 2012 2013 2014 2015 2016 H1

2016*

H2

2016*

Change, y-o-y, %

TALLINN RIGA VILNIUS

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2011 2012 2013 2014 2015 2016 H1

2016

H2

2016

Change, Y-o-Y, %

TALLINN RIGA

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 5

Figure 10: New Shopping Centre Stock 2015 & 2016 and Stock under Construction in other CEE Countries

BALTIC RETAIL

Source: CBRE Research, Q1 2017

0

500

1 000

1 500

2 000

2 500

Czech

Republic

Poland Romania Croatia Slovakia Bulgaria Hungary Russia Serbia Ukraine Austria

sq m

Capital Pan-regional UC Capital UC Pan-regional

Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

P ER FOR MANCE OF R ETAI LER S IN THE BALTICS

Figure 11: Top Four Fashion Retailer Sales Areas and Changes y/y in

the Baltics

Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

Figure 12: Top Four Fashion Retailers’ Turnover Changes, %, y/y

0%

10%

20%

30%

0

20 000

40 000

60 000

80 000

100 000

Baltika Group H&M Apranga Group LPP Group

Tota

l sale

s a

rea, sq m

Total sales area, sq m, 12/2016

Change in sales area, sq m 2015/2016 (the right axes)

17,1%

6,0%6,1%

8,9%

15,2%

5,4% 5,9%

8,1%

0%

5%

10%

15%

20%

EE LV LT Baltics

Total

Turnover change H2 2016/H2 2015 Turnover change 2016/2015

9%

28%

46%

17% Baltika Group

H&M

Apranga Group

LPP Group

Figure 13: Share of Total Sales Area for the Top Four Fashion

Retailers in the Baltic Region, %

Source: CPB Real Estate Services, part of the CBRE Affiliate Network, Q1 2017

H2 2016/Q1 2017 CBRE Research © 2017 CPB Real Estate Services, part of the CBRE Affiliate Network | 6

Source: CBRE Baltics Research, based on Statistics Latvia, Statistics Lithuania and Statistics Estonia

Figure 14: Total Retail Sales by Category in the Baltics, Change, %, hy-o-hy

Source: CBRE Baltics Research, based on Statistics Latvia, Statistics Lithuania and Statistics Estonia

Figure 15: Population statistics in the Baltics, % changes from 2010

Figure 16: Private Consumption and CPI, Change, %, y-o-y, forecast

EE-Estonia; LT-Lithuania; LV-Latvia

Source: CBRE Baltics Research, Oxford Economics forecast

BALTIC RETAIL

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2010 2011 2012 2013 2014 2015 2016 2017e 2018f 2019f

Perc

ent

Private Consumption: EE Private Consumption: LV Private Consumption: LT

CPI Estonia CPI Latvia CPI Lithuania

-40%

-20%

0%

20%

40%

60%

80%

100%

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Change, hy-o-hy

RETAIL TRADE: TOTAL BALTICS, change, HY-O-HY, % FASHION:TOTAL BALTICS, change, %, hy-o-hy

FOOD AND BEVERAGE: TOTAL BALTICS, change, % hy-o-hy INTERNET SALES: TOTAL BALTICS, change, %, hy-o-hy

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

2010 2011 2012 2013 2014 2015 2016 2017e

Perc

enta

ge c

hange

Estonia Latvia Lithuania TALLINN RIGA VILNIUS

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy,

we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and

completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be

reproduced without prior written permission of CPB Real Estate Services.

BALTICS RETAIL

RESEARCH DEFINITIONS

Central and Eastern Europe (CEE) – includes the following countries: Bulgaria, Croatia, Estonia, Latvia, Lithuania, the Czech

Republic, Hungary, Poland, Romania, Serbia, Slovakia and Ukraine.

Prime Rent – for retail, Prime Rent is represented as the typical «achievable» open market headline rent which an

international retail chain would be expected to pay for a ground floor retail unit of up to 200 sq m of the highest quality and

specification and in the best location in a given market commensurate with demand in each location.

Average Prime Rent – represents the Average Prime Rent for all prime units that were taken-up during the survey period as

specified in the definition for the Prime Rent variable. This rate indicates an average of what it would have cost to lease space

in the market.

Average Rent – represents the Average Rent for all units that were taken-up during the survey period. This rate indicates an

average of what it would have cost to lease space in that market.

Shopping Centre Stock – represents the total completed retail space (occupied and vacant) in the traditional shopping

centres at the survey date, recorded as net rentable retail area. Included are traditional shopping centres with a gross

lettable area above 10,000 sq m, excluding hypermarkets, DIY stores, retail parks and other specialised stores.

ABOUT CP B R EAL ESTATE SER VICES:

• Part of the CBRE Affiliate Network

• Headquartered in Riga, Latvia from 2011

• Representative offices in Vilnius and Tallinn

• Headcount – 23 people

• Providing services in:

• Valuation,

• Consulting & Research,

• Property Sales,

• Property & Asset Management,

• Tenant Representation,

• Agency Services – Retail, Offices, Industrial &

Logistics.

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