Annual GDP growth in 2011 across the Baltics is predicted at 3.5% and consumer confidence is rising with one of the region’s major shopping centre owners and operators, Linstow Center Management, reporting uninterrupted turnover growth over the last 14 months in all 6 Baltic properties it manages.
Turnover in these properties over the first 9 months of 2011 grew by 6.9% compared to the same period in 2010, and growth in the best properties reached 10%.
Speaking at the International Council of Shopping Centers (ICSC) Baltic States Retail Real Estate Conference, Marcis Budlevskis, Lease and Business Development Director at Linstow Center Management, and chair of the ICSC Baltic National Committee, said: “The trend is clear, demand is there and the numbers of visitors to the region is increasing, boosting shopping centre footfall further. If the Baltics only had to worry about itself then I would be very confident.”
Emerging from the economic downturn, The Baltic States is seeing manufacturing growth up on 2009 although it has leveled off recently and the region is well aware that it is not immune to what is happening elsewhere across Europe.
Tõnu Palm, Chief-Economist of Nordea Bank Estonia, also speaking at the conference, said that wages are increasing at a good speed, though not as fast as inflation. He predicted that with lower external price pressures inflation is expected to decelerate in the Baltics at the fall.
“The Baltics have undergone severe adjustment (including cost cutting), during the past crisis. This means they are better prepared to weather another storm or crisis,” he said. “The Baltics remain an attractive investment destination and are hence increasingly benefiting from Scandinavian interest to do business in the region.”
Retailers speaking at the conference confirmed their confidence in the area. Estonian fashion retailer The Baltika group operates four retail concepts: Monton, Mosaic, Baltman and Ivo Nikkolo across the Baltics, Russia and the Ukraine, and is now seeking to expand further into Europe. Other retailers are keen to move into The Baltics, where they see untapped potential. Dutch menswear retailer, Suitsupply, which has stores across the world including China and the United States, has stores in Riga and Vilnius and sees the potential for more. Aurora Fashion operates retail concepts Karen Millen, Oasis, Warehouse and Coast which collectively have 1639 stores in 49 countries. Like Suitsupply, Aurora Fashion is also seeking to move into the Baltics.
This as further proof of the region’s attractiveness, says Linstow’s Marcis Budlevskis: “We have a strong culture of local retailers who know their customer best and add flavor to a vibrant shopping environment. Successful Baltic retailers are looking further afield for expansion, but they must accept that international retailers also see Baltics as an attractive market and are keen to seize a market share for themselves. The retail real estate industry here is also very flexible operating with short-term lease agreements within a culture of flexible employment, which allows frequent tenant changes improving tenant mix in most shopping centers. This makes for a more diverse shopping environment which can only be good for the region’s longer term economy.”