Shopping malls riding out the financial crisis
Smart Park, a new commercial park developed by Ellaktor subsidiary REDS, is scheduled to open its doors near Spata in eastern Attica later in October, as in recent months it has become blatantly clear that the sole category of real estate which has so far managed to comfortably ride out the financial crisis, not to mention show signs of growth, is that of shopping centers.
Amid the current storm of tax hikes, slashed incomes in an increasing number of households and galloping unemployment, companies managing malls are expecting retail consumption to decrease even further. At the same time, they are faced with additional operating costs stemming from the new property levy, which will be collected through electricity bills and which will not be paid by the tenants.
Lamda Development, the biggest proprietor of commercial centers in Greece, will be hit the hardest, as among its many other assets, the group owns three major shopping centers: The Mall Athens and Golden Hall, both in the capital, and Mediterranean Cosmos in Thessaloniki, with a total surface area of over 100,000 square meters.
Despite the current woes, sales at existing malls remain satisfactory, a fact which is persuading real estate developers to make new investments, especially in terms of helping already operating commercial centers to attract more visitors.
Based on the first-half figures for 2011 published recently by Lamda Development, Golden Hall?s operations are improving, with overall store turnover rising by 1 percent and repeat profitability standing at 2 percent, while turnover fell by 10.4 percent at The Mall Athens and 9.5 percent at Mediterranean Cosmos compared to last year?s figures.
In the last two years, as consumer spending choices grew at commercial centers, retail stores situated in traditional commercial districts started to suffer. The crisis has even hit areas such as Ermou, for years the most fashionable shopping street in the capital. As a result, retail center proprietors are aiming for an even greater portion of the already shrinking consumer pie. Besides a series of revamps scheduled to take place at existing commercial centers, such as Pasal Development?s Athens Heart and Lamda?s Mediterranean Cosmos, the development of new shopping malls is expected to continue this year and for a while to come, given that demand for such venues is reinforced by consumers who seem to prefer shopping malls to more traditional stores.
The possible revival of a plan for a property situated on the corner of Kifissou Avenue and Pireos Street owned by Plaza Centers (an indirect subsidiary of Elbit Imaging Ltd, an Israeli public company) in southern Athens, falls into this category.
Following an extended delay, mainly as a result of archaeological finds, the company appears to have acquired a construction permit for the erection of the 26,000 square meter Helios Plaza retail and entertainment complex. The company aims to begin construction next year, while the project?s completion is scheduled for 2014, when it is estimated that the country?s economy will have improved.
At the same time, the construction of a cultural and commercial center on the corner of Kifissos Avenue and Lenorman Street is currently in the early stages of planning by Artume, a company that is part of British MGPA Fund, with the participation Greek firm Prufrock. The project covers a surface area of 53,000 square meters and will feature 2,400 parking spaces.
Meanwhile, the REDS project, Smart Park, in the area of Yialou in Spata, is expected to open for business within the next few weeks. The new commercial center is situated next to the McArthurGlen designer outlet that was inaugurated in June. The first part of the investment reached the sum of 75 million euros and covers a surface area of 35,000 square meters, while the second phase is expected to be completed by the end of next year.
According to the listed company, the new commercial center has already signed leasing agreements covering 80 percent of its surface area.
Still, British group Henderson recently opted out of the deal for a 70-million-euro lease by paying compensation to the amount of just over 4 million euros, as reports state it is now planning to invest in Northern Europe and not the crisis-riven south.
