Entertainment features, drawing closer to city centers and increasingly stronger brands – How retail parks became highlights in cities throughout Serbia

The interest of investors in building retail parks in Serbia is not waning, and announcements of new projects and good news from construction sites keep on coming from all over the country. After Valjevo, Nis and Cacak, Immofinanz is planning to raise new Stop Shop facilities in Pozarevac, Lazarevac and Vrsac. The Poseidon Group, having completed the Capitol Park in Sabac, is working at full speed in Rakovica, where the opening is expected to take place in late October, and the completion of the investment in Sombor has also been announced. RC Reinvest is preparing itself for projects in Kraljevo and Vrsac. NEPI has bought land in Krusevac. Finally, the long awaited IKEA should reach the decision on raising a retail park next to the department store in Bubanj Potok by the end of 2017.

The Serbian market is specific in many aspects when it comes to retail parks, which are taking over the primacy from classical shopping centers at an increased pace. The purchasing power dictates the rules, and, according to majority opinion, only big cities like Belgrade, Novi Sad, Nis and Kragujevac can feasibly accommodate shopping centers. The rest opt for retail parks, which offer considerably more favorable lease prices, whereas shoppers are offered brands in the medium to low price range. Nevertheless, instead of being raised on the outskirts of cities, or even several dozen kilometers away from the center, retail parks are drawing closer to the “good” locations. Instead of implementing the model from developed countries – come, shop and go – the local scene has in fact developed a model of open air shopping malls. Investments are made in additional features, marketing, maintenance, in short – in providing the customer with a full experience.

– Two important things have taken place in the Serbian market. The first is the development of retail parks in so-called secondary cities, which had led to the strengthening of local structures through new investments. On the other hand, Serbia is a pioneer in the implementation of a new concept of retail parks, which are in fact open air shopping centers – says Mia Zecevic, a partner at Novaston Asset Management.

Since the beginning of its operations in Serbia, Novaston Asset management has cooperated with big companies and investment funds, which keep on investing in the real estate market. Among them are renowned names like Immofinanz Group, Aviv Arlon, NEPI...

(Stop Shop in Nis opened in April 2016) – Our company came up with the new concept in cooperation with foreign clients. This is a specific architectural solution, which takes into account movements and needs of customers to the end of facilitating the shopping by a strategic approach to outlet arrangement – Zecevic pointed out at the Second Serbian Property and Infrastructure Development Conference, held several days ago in Belgrade.

Unlike developed markets, where people come to retail parks with a plan, spend 30-45 minutes there and buy the product, in Serbia one first has to animate the shopper so that they would come, spends some time there, have fun and only then purchase something.

– Shoppers needs to enjoy the time they spend in retail parks. In order to achieve this, a park contains a movie theater, cafes and children's playgrounds. For example, this is the concept implemented in the Stop Shop park in Nis – Zecevic reminds.

New brands in retail parks

In 2014, the Poseidon Group opened the Capitol Park in Sabac, which is now 100% leased. The key to success of a retail park is location and a careful selection of tenants (tenant mix), reminds Milica Mitrovic, Senior Asset Manager of the Poseidon Group. She adds that being a pioneer in a business, that is, there being no similar projects in the city, is always an advantage.

– However, since recently, retail parks are being built in the cities where there's already competition. Time will show how sustainable this is.

Milica Mitrovic also points out that so-called secondary cities (under 40,000 citizens, i.e under 70,000 in the wider area) are ideal locations and that investors always take into consideration the price of land and the possibilities of purchasing the land, but also thoroughly analyze the purchasing power of the citizens.

(Capitol Park Rakovica, in former Rekord facility location, to revive the Belgrade municipality) – Retail park locations in Serbia are changing, and they are definitely not being raised solely on the city outskirts anymore. It's also interesting that retail park space is increasingly wanted by tenants who have been primarily focused on shopping centers so far. The development of retail parks is not waning and they are taking over the primacy over shopping centers in Serbia. The potential for building is much bigger – Mitrovic adds.

The Poseidon Group has started a new venture – the construction of a retail park in the Belgrade neighborhood of Rakovica. As Mitrovic reminds, it will be one of the biggest retail parks in the capital of Serbia (22,000 m2). This shoppingholic Mecca, which is expected to revive Rakovica and make this part of Belgrade important again, should open in late October 2017, she says.

Furthermore, Poseidon is developing the third project in Serbia – the Capitol Park Sombor, which should have an area of around 6,000 m2, the opening of which is expected to take place by the end of 2017 as well.

Shoppers always looking for something new...

The Israeli Aviv Arlon in fact brought the concept of a retail park to Serbia when it opened the Aviv Park in Pancevo six years ago. Danka Gladovic of this company reminds that, when they came to Serbia, they deliberated for a long time between raising a shopping center and a retail park.

– We concluded that retail parks should be built in secondary cities. In Pancevo, we built the retail park in the center of the city, which is specific to Serbia. We also managed to bring brands to Serbia which had not been present there until then – Gladovic says.

(Aviv built the Zvezdara complex on only 1 ha) Many doubted the project when the company started realizing it, but it turned out that the investor had made the right decision. Aviv Park Pancevo has around 28,000 m2 of leased space and more than 90 tenants, putting it shoulder to shoulder with shopping centers and among the best and most successful retail parks in Serbia, Gladovic points out.

– I believe that the fact that we built the retail park in Pancevo in stages, enabling us to stay at a certain level and provide something new, has contributed to it continuous success throughout all six years. Also, there's the excellent location, positioned very well within the city – Gladovic adds.

Retail parks in Serbia should be closer to city centers, she believes, as they themselves are centers of activity.

– Serbia has hybrid projects, where a lot is invested in marketing, always offering something new. This approach is entirely different from the one used in Europe, where a retail park is built, leased and afterwards operates with minimal investments and minimal maintenance. We offer good prices to tenants, but we also provide quality.

Aviv Arlon has also built the retail park in Zvezdara, Belgrade, as well as the facility in Zrenjanin, the second biggest such facility in Vojvodina, after Novi Sad's BIG CEE, and the company also presented plans for Pozarevac in 2016.

IKEA – new ideas for Belgrade

The Swedish company IKEA has bought more land than it needs for the store it is to build in Bubanj Potok and, when the realization started, they revealed the possibility of raising a retail park next to the department store in Belgrade, as is the case in other locations throughout the world.

The group has 59 shopping centers in its portfolio, as well as 4 retail parks (in Europe, Russia, China...). The area in question amounts to a total of 3.2 million square meters, and the facilities are visited by around 450 million people a year. When compared to around 800 million visitors in department stores, it becomes clear what an important segment it is for IKEA, said Vladislav Lalic, Regional Property & Expansion Manager at IKEA South East Europe.

– The decision on the construction of an IKEA retail park in Belgrade will be reached by the end of the year. It should have an area of around 40,000 m2, and the investment is worth around EUR 60-70 million – Vladislav Lalic said.

IKEA is currently preparing for opening an outlet center in Zagreb. The tender is in progress, and the works are expected to start in May 2017. The facilities, in which the company is to invest EUR 40 million, are to have a total of around 16,000 square meters. In Zagreb, as in Belgrade, the retail park is expected to employ 300 people (along with the employees at the department stores). IKEA started the third wave of employment at the department store in Belgrade several days ago. The opening should take place this summer, and the company is considering the possibility of raising an additional department store in the capital of Serbia.

Belgrade brings together investors, consultants, state representatives...

The Second Serbian Property and Infrastructure Development Conference, held on February 21 at the Metropol hotel, was organized by TGI Group International, under the sponsorship of the Chamber of Commerce of Serbia, the Embassy of Canada, the Embassy of Israel and the support by numerous consulting companies in the field of real estate. A panel on new trends in the development of shopping centers and retail parks was also organized within this event.

M.M.