lh x cw market report A4_23.03.02 v34 interactive72

NEW SUPPLY While the modern retail provision still lags behind the level of Western European or even Central and Eastern European capitals, in the post-financial crisis period, new projects have slowed down to such an extent that Etele Plaza delivered in 2021, is the only new development since 2013. No other shopping centre project is currently in the pipeline. Overall, Hungary is in a relatively resilient position, with low saturation of shopping centres. Landlords of existing facilities are responding to wider changes in retail with refurbishment projects - with the aim of creating a more sophisticated, modern and aesthetically pleasing shopping experience. As in Western Europe, the ‘experiential’ aspect of retail is becoming increasingly important, with a strong emphasis on F&B and leisure elements. Landlords of existing centres have started full refurbishment projects such as Campona or GoBuda (former EuroCenter), both completed in 2022. The development market is clearly focused on the repositioning and refurbishment of older stock, as 93% of the shopping centre stock is more than 10 years old and struggling to meet the modern needs of shoppers and retailers. There are currently two new developments in the pipeline, both are multifunctional projects, with retail as an additional feature. The Corvin Department Store will be completely redeveloped and will offer 7,300 sqm of retail space, the Zugló City Center Project, a large scale development with a 10,000 sqm retail element. PERFORMANCE The performance of shopping centres continued to improve last year. By the end of 2022, turnover in the best performing schemes was only around 10% below the pre-pandemic benchmark and 25-30% higher than in 2020-2021. Footfall is still 25-30% below 2019 levels on average, indicating that shoppers are arriving at shopping centres with a shopping purpose and leaving with larger basket sizes. This level of footfall is expected to stabilise. Shopping centre landlords are committed to keeping the increased operating costs caused by the energy crisis under control, so they have introduced drastic energy-saving measures in the short term and are planning energy efficiency renovations as a medium-term solution.