Slovakia

Slovakia
Slovakia is a small country with a population of 5.4 million, in the heart of Central Europe. It has borders with Poland, Hungary, Ukraine, Austria and the Czech Republic. Since gaining its independence from the Czech Republic in 1993; the country has joined the European Union (2004) and the Eurozone in 2009. Slovakia has one of the fastest growing economies in the European Union.

In recent years many new brands have entered the market, although it has been rather overshadowed by its larger neighbours. Brands such as Peek & Cloppenburg, Marks & Spencer, H&M, Inditex brands plus Reserved and other LPP brands are however reportedly all trading successfully in Slovakia as Slovakian consumers are very fashionable and love brands, plus they are willing to spend their money on fashion.

Foreign tourist numbers have slightly increased in the last few years reaching over 2 million in 2015. The main countries of origin of the tourists are the Czech Republic, Austria, UK, Russia, Italy and Germany.

ECONOMIC SUMMARY
ECONOMIC INDICATORS*2015E2016F2017F2018F2019F2020F
GDP growth 3.63.22.72.93.32.9
Private Consumption Growth -05-0.2-0.11.32.12.4
Industrial production duction 7.02.93.44.03.63.4
Investment t 14.00.32.82.83.13.0
Unemployment rate (%)11.510.19.89.59.29.0
Inflation-0.3-0.11.52.42.42.4
US$/€ (average)1.11.11.11.11.11.1
Interest rates Short Term (%) -0.1-0.3-0.2-0.10.30.6
Interest rates 10-year (%) 0.91.01.62.22.83.2
Note: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Oxford Economics Ltd. and Consensus Economics Inc

ECONOMIC BREAKDOWN
Population 5.4 million (2015)
GDPUS$86,6 billion (2015)
Public sector balance -3.0% of GDP (2015)
Public sector debt52.9% of GDP (2015)
Current account balance-1.3% of GDP (2015)
Parliament Direction-Social Democracy (Smer-SD) majority government
PresidentAndrej Kiska (Elect)
Prime Minister Robert Fico
Election dates2020 (Parliamentary) 2019 (Presidential)
RETAIL SALES GROWTH:
% CHANGE ON PREVIOUS YEAR
Slovakia20152016F2017F2018F2019F2020F
Retail Volume1.41.33.64.64.64.4
Retail Value-1.9-1.9-1.9-1.9-1.9-1.9
Source: Oxford Economics Ltd

LARGEST CITIES (2015)
CITYPOPULATION
Bratislava422,932
Kosice239,200
Presov89,959
Zilina81,114
Banská Bystrica78,758
Nitra77,670
Trnava65,596
Trencín55,698
Martin55,687
Poprad52,037
Prievidza47,143
Zvolen42,868
Povazská Bystrica40,373
Michalovce39,455
Nové Zámky38,721

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Slovakia: 48.814099, 19.215088

MAJOR DOMESTIC FOOD RETAILERS

Coop, Terno, CBA, Fresh Market

MAJOR INTERNATIONAL FOOD RETAILERS

Tesco, Billa, Lidl, Kaufland, Carrefour

MAJOR DOMESTIC non-FOOD RETAILERS

Gate, Exisport, Panta Rhei, Martinus, Dracik 

INTERNATIONAL RETAILERS in slovakia

Inditex brands(Zara , Bershka, Pull&Bear , Stradivarius), Peek & Cloppenburg, C&A, New Yorker, Mango, Marks & Spencer, Next, Deichmann, CCC, Humanic, Sports Direct , Decathlon, bauMax, Hornbach, OBI, Ikea

Food & Beverage Operators

NordSee , Wagamama, Medusa Group (Kolkovna , Primi, Mercado, Ventuska so on), Mondieu, Starbucks, Coffeeshop Company Julius Meinl

TYPICAL HOURS
MONDAY - FRIDAYSATURDAYSUNDAY
09.00-21.0009.00-21.0009.00-21.00

The Slovakian retail market is often overlooked by international retailers in favour of its larger neighbour the Czech Republic. However attention is now increasingly focused on Slovakia as the Czech Republic has become more mature and it is a Euro-denominated market. International retailers have exerted considerable influence in the market. While Bratislava has been the main focus for international retailers, some of the other cities are developing their retail offer.

High street retail in Slovakia is in its relative infancy with tenants more likely to be local retailers and businesses, with some occasional exceptions to this. While Obchodná Street is emerging as the center of high street retail in Bratislava, its development is at an embryonic stage, compared to the capitals of neighbouring countries (Vienna, Budapest, Prague). Shoppers in Slovakia and Bratislava are arguably more aspirational than in many western countries, but the relatively small tourist market and proximity to Vienna have so far prevented the market from establishing a notable luxury retail segment.

Modern Slovakian retail is dominated by shopping centers with a total of just over 0.9 million sq.m in January 2016, although this remains below the European average levels of floorspace in shopping centres (170 m/’000 population compared to 238 sq.m/’000 in the EU27 at January 2016). The most successful shopping malls have 100% occupancy with retailer waiting lists.

The typical entry point for international brands is the top shopping centers, especially the three dominant schemes in Bratislava; Aupark, Eurovea and Avion. There are seven regional capitals in Slovakia and six of them have a dominant scheme. In the third city by population, Presov, there are currently 2 new shopping centers under development, with the opening dates in 2018/2019.

The retail warehouse market in Slovakia is developing fast covering the whole country, including small cities with less than 15,000 inhabitants. . Operators such as Jysk, Kik, Takko, Deichmann, CCC, dm, Planeo NAY Electrodom,Decathlon, Hornbach and Obi are present in these schemes.

The first outlet shopping center in Slovakia, One Fashion Outlet, near Trnava, opened in October 2013. One Fashion Outlet has 130 – 150 outlets but suffers from its proximity to Parndorf near Vienna, with its higher discounts and greater number of brands. E-commerce continues to grow in Slovakia as the retailers diversify the offers and provisions.

Retailers can enter direct and it is relatively easy to do so. The Slovakian government is pursuing a pro-business modernizing agenda and has made deep structural reforms to create a business-friendly environment. Expansion via the franchise route is often however the preferred method of entry for most small-to mid-sized international brands.

Retailers in Slovakia usually require 5 years leases + option which gives them opportunity to extend the lease. On the other side, landlords insist on indexation of the lease.

Since it is a retailers market in Slovakia, tenants can occupy a new premise within few weeks. However to secure good location in best shopping malls can take several months.

TOP SHOPPING CENTERS BY SIZE
NAMECITYSIZE (GLA SQM) YEAR OPENED
Avion Bratislava103,0002002/2008/2012
Eurovea Bratislava59,0002010
Aupark Bratislava54,0002001/2007
Bory Mall Bratislava54,0002014
OptimaKosice50,0002002
Aupark Kosice 44,0002011
CentralBratislava32,0002012
EuropaBanska Bystrica31,0002006
MlynyNitra28,0002009
LaugaricioTrencin 26,0002009
Aupark Zilina 24,0002010

New Entrants to the Market

StarbucksChapsMACEstee LauderClinique
Mango Men

KEY FEATURES OF LEASE
ITEMCOMMENT
Lease TermsTypical lease terms for retail units are generally five or ten years, often with options to extend (5 or 10 years). Rents are quoted in EURO per sq m per month. Usually no break options but can be agreed for large requirements. Restrictive user clauses are common.
Rental PaymentPayable quarterly or monthly in advance for shopping centers. Monthly for high street units. Frequently turnover rents of between 3-10% (depending on use, on average 8%) are employed in new retail developments. Turnover rents are usually subject to a base rent. A security deposit equivalent to three months’ rent, service charge and VAT applicable on the amount is usually required or the equivalent parent company guarantee. Tenants can be asked to provide a bank guarantee in office transactions. Premiums/key money paid exceptionally in retail deals. Rents indexed annually to Eurozone or EU 27 HICP inflation. Statutory right to renewal is negotiable.
Rent ReviewRents indexed annually to Eurozone or EU 27 HICP inflation. Statutory right to renewal is negotiable. Rents are indexed automatically on an annual basis. Upwards indexation is used.
Service Charges, Repairs and Insurance Landlord is responsible for external structure and is negotiable in high street deals. Tenants are responsible for internal repairs. In case of shopping centers, a marketing fee 1- 2 EUR/sq.m/month is applied. Service charges are usually paid by the landlord by tenant charging. Utilities are not included in service charges. Landlords are responsible for building insurance. Additional entry fee for big tenants is applied.
Property Taxes and other costs Tax applies to ownership of real-estate (The local property tax or “dan z nehnulelnosti”) and is typically paid by landlord to the local government annually. It is a scale calculation, usually passed on to tenant via service charges or base rent. 20% VAT in most cases. The Tenant shall pay to the Landlord all Value Added Tax (V.A.T) or any similar tax, levy or duty which may be payable by the Landlord upon demand. VAT at 10% is charged on rental payments but it is usually recoverable by most tenants (tax advice should be sought). Each party will meet their own legal and other professional costs.
Disposal of a LeaseSub-leasing is negotiable but is always subject landlord approval. Early termination is negotiable but subject to penalty. The tenant is responsible for reinstating the premises with the exception of wear and tear at the end of the lease.
Valuation MethodsThere is no absolute standard for measuring floor space, although generally net internal area (sometimes excluding, sometimes including vertical circulation) GIF or BOMA are used. Industrial leases do not tend to follow a particular standard. Usually the ground floor has a higher value than other floors.
LegislationCode 116/90. A standard lease contract is signed between the tenant and the landlord. Leases are legally binding on both parties.


Slovakia Contacts

CRISTINA DUMITRACHE, MRICS

Managing Partner, Cushman & Wakefield Property Services
s.r.o. 10 Pribinova Str.
811 09 Bratislava

Tel: +421 259 209 340
Mob: +421 911 048 233 

KATARINA PAULE

Retail, Senior Negotiator, Cushman & Wakefield Property Services
s.r.o. 10 Pribinova Str.
811 09 Bratislava

Tel: +421 259 209 370
Mob: +421 910 894 425