(Ag Real Estate) "Street" Retail - Development of Specialized Retail in Serbia

Summing up the results from the previous and comparing them with the current year, we arrive to the conclusion that certain segments of the real estate market in Serbia, have not suffered great disturbances in spite of the anticipations. Indeed, apartment sale is considerably reduced, office space market has recorded only a few significant transactions and turnover of shopping centers is below expectations.

On the other hand, one of all segments is the least hit by the global events at the local real estate market. It is ’’street’’ retail!

The real estate market, in Serbia generally, is still in its initial phase of development. Basically, Serbian real estate market is unsaturated and, as such, has great potentials. On the other hand, however, it is still underdeveloped and passes through a period of ’’teething troubles’’. Everything has its value which today, especially at the time of the capital crisis, multiplies the problems and additionally burdens all assets that the real estate market in Serbia has and offers to the interested investors.

When it comes to the real estate market in its specialized retail segment, greater development advances in relation to other segments are apparent. Standards defined and prescribed in the world slowly determine certain rules at the domestic market as well. Along with construction of new shopping centers whose activities in the field of further development have been reduced for a while, a distinct specialization and rise of service quality in this operation is obvious. The remainder of disposable and available potentials in the domestic retail market is being ’’pressed down’’ in order to ’’make the most out of it’’.

Therefore, ’’street’’ retail whose operation in Belgrade survived a huge impact after the opening of two grand shopping centers – Delta City in 2007 and Ušće Shopping Centre in spring this year - is slowly restoring business interest. In this case, the interested retailers are assessed doubly: as new potential tenants and as ‘new-old’ entrepreneurs whose business will inspire ‘new life’ in the pedestrian and shopping zones of downtown Belgrade and other cities of Serbia.

Street Retail

The last trimester 2009 points out that the very street retail recorded the greatest number of transactions and activities either in renting or in purchase. Once more it is proved that retailers’ point of support in expansion of their retail network reclines on the streets and the habit of a Serbian consumer to buy in the ’open’. The unavoidable strategy of most retailers, either domestic, foreign who have already taken part in the market or those who are only entering the Serbian market, is activity in large market centers, smaller Community Malls and department store chains. In the first place, Robne kuće Beograd, which provide a perfect infrastructure for creation and expansion of the network at the Serbian market. Still, street retail occupies a special place and right now, in the years of the world crisis, it finds full play.

Several reasons that explain everything should be sought in the fact that this market in Serbia, Belgrade, has transformed from the renters’ market into the tenants’ market. The crisis affects the business and turnover of the tenants which reflects on the readiness of retailers to pay high rents. Likewise, enlargement of the space offer, restrictive strategies that rule out further expansion and rent of new stores, result in rental fees drop. Furthermore, terms and conditions for taking retail space on lease predominantly in regard of technical furnishing and the level of works performed in the stores have changed. The already mentioned turnover drop has caused vacating a great number of street stores at attractive locations due to tenants’ incapability to pay rental fees which were acceptable earlier but under different market circumstances. Transformation of the market into the tenants’ market, which enables a significantly more favorable position of the tenants when it comes to rates and conditions, selection and vacating the most attractive street stores, was caused by the global crisis and turnover drop.

The odds are stack in favor of great retailers and brands who grab an opportunity to occupy good locations in Belgrade and other bigger Serbian cities. Those whose strategy is not based on drastic expenditures cut and freezing or balancing their regular activities to minimum but on an aggressive approach and attack on the market segments abandoned by the competition, those who consider this time as favorable for investments and thus strengthen their long-term positions and those who see their good opportunity in the dormancy and inactivity of their competition – they dominate the market and build strong foundations for future development and survival after the years of crisis. Numerous new stores, new brands in the streets are the best illustration that regardless of the bad situation and low turnover at the moment the stores in the most attractive and busiest streets (which are an expense at the moment) are a part of the long-term development plan, a signal to the competition and a future potential.

Anticipations and forecasts

The forthcoming period at the street stores market is anticipated to be featured by similar or identical situation. The tenants who, after a hard year, look forward to the month of December and huge turnovers to which they were accustomed in the previous years (primarily in 2006, 2007, 2008), will face the turnover less by as much as 50% than in the aforementioned years. In addition to the stated factors featured by decrease of citizens’ purchase power, it will be also affected by the new non-visas regime enabling Serbian citizens to travel and go shopping under much more convenient conditions at some other European locations. It means that at the street retail market a great number of stores at attractive locations will be vacated in the first three months 2010 and available to great retailers.

Rank properties Belgrade

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