POLAND of retail opportunities SHOPPING CENTERS & RETAIL STREETS Radosław Knap Deputy General Manager Polish Council of Shopping Centres

@confimprese #RetailBusinessPolonia

POLISH COUNCIL OF SHOPPING CENTRES TRUSTED PARTNER AND ADVISOR FOR THE RETAIL SECTOR

The Polish Council of Shopping Centers is the biggest organization in Poland that gathers companies related to the shopping centres and high streets industry. The Polish Council of Shopping Centres (PRCH) is a not-for-profit association that represents more than 200 businesses operating on the commercial real estate market. We are the Polish national partner of the International Council of Shopping Centers (ICSC), and were established in Poland in 2003.

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YEARS OF ACTIVITY INVESTORS, DEVELOPERS, SHOPPING CENTRE MANAGERS, RETAILERS, ADVISORY AND SERVICE COMPANIES

200+

MEMBER COMPANIES

7000+

CONTACTS IN THE RETAIL SECTOR

70%

SHOPPING CENTRES MANAGED BY ASSOCIATED COMPANIES

3000

SHOPS OWNED BY RETAILERS AFFILIATED WITH PRCH

@confimprese #RetailBusinessPolonia

THE SCOPE OF ACTIVITIES

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POLAND – ECONOMIC OVERVIEW LEADING THE EURO-ECONOMIC GROWTH

Poland was the only European country to have GDP growth in 2009 crisis

Donald Tusk – Polish Prime Minister (2007-14), European President since 2014

@confimprese #RetailBusinessPolonia BNP PARIBAS REAL ESTATE |

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POLAND – ECONOMIC OVERVIEW Source: BNP Paribas Real Estate

POLAND – KEY FACTS AND FIGURES

CPI

5,0% 4,0% 3,0% 2,0%

2016(f)

2017(f)

2016(f)

2017(f)

2015(f)

2014(f)

2013

2012

2011

0,0%

2010

1,0%

Unemployment rate 15,0% 12,5% 10,0% 7,5% 5,0%

2015(f)

2014(f)

0,0%

2013

2,5% 2012

 1.6% at the end of 2013, the result for Q1 2014 shows 3.4% GDP growth y-o-y with positive outlook for the next few years ranging from 3.2-3.8%.  Inflation (CPI) remains at the low level, below 1%. Despite the pick-up in growth, CPI is likely to remain muted in the near term, not moving above 2% until 2015.  Labour market is strengthening, which is reflected in a sustained decrease of unemployment rate (12% in June 2014 vs. 13.4% in December 2013) , while real earnings growth picked up noticeably.

GDP

6,0%

2011

RECENT ECONOMIC DEVELOPMENTS

GDP growth and CPI

2010

 Population 38,5 mio  Central location in the same time zone as major European markets  Stable economy, avoiding recession during the last crisis, developing at the high rate  Diversified structure of industry in terms of sectors  Highly skilled and educated labor force – 500 public and private universities and 2 million students  Attractive FDI destination – presence of many automotive, high-tech, white goods producers as well as business services providers  BPO/SSC sector continues to expand driving office market growth in regional cities  The largest beneficiary of the EU structural funds, receiving nearly 20% of the total sum for the period 2007-2013. The 2014-2020 budget allocates € 82.5bn in Poland, 23% growth versus the last period.

Source: GUS, (f) Consensus Forecast,

@confimprese #RetailBusinessPolonia BNP PARIBAS REAL ESTATE | 5

SHOPPING CENTRES IN POLAND 426 SHOPPING CENTRES IN POLAND: 381 35 10 33

Traditional Shopping Centres Retail Parks Outlet Centres under construction (over 563,000 sq m GLA)

Source: PRCH Retail Research Forum, 1 half of 2014

@confimprese #RetailBusinessPolonia

POLAND RETAIL MARKET  Total modern retail stock in Poland: 12.2 million sqm of GLA  Total shopping centre stock: 10 million sqm of GLA in 426 shopping centres

 Average size of shopping centre: 22,400 sqm  Shopping centre density in Poland: 262 sqm of GLA per 1,000 inhabitants

SUPPLY AND PIPELINE The supply of retail space in Poland in 1993-2014 (forecast) 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0

17% total of retail sales 700 Euro

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 H1 2014 2014 prognoza

per capita

main agglomerations cities 200-400k cities 100-200k towns (less than 100k residents)

ca. 370 000 employed in SC ca. 2,5% of total employment in Poland

Source: PRCH RRF, H1.2014

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PRCH TURNOVER INDEX for shopping centres Av. Gross Sales Turnover in EUR/1 sqm GLA in months 400,00 EUR 350,00 EUR 300,00 EUR 250,00 EUR 2012 200,00 EUR

2013

150,00 EUR

2014(Q4est)

100,00 EUR 50,00 EUR 0,00 EUR 1

2

3

4

5

6

7

SC SALES

 Once there are about 5% of new shopping centre supply annually, the avarage sales from „the 84 group” decreses on similar level abouth -3,5% YoY

 Shopping centres sales stay on the stable level of about 3000 – 2820 EUR / 1 sqm GLA annually

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10

11

12

Av. Annual Sales Turnover EUR/1 sqm GLA

 The PRCH Turnover Index measures the avarage sales turnover from 84 shopping centres from Poland

8

3500 3000 2500 2000 1500 1000 500 0 2012

2013

2014(Q4est)

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POLAND RETAIL MARKET

Manufaktura, Łódź MAJOR AGGLOMERATIONS – SHOPPING CENTRES

Stary Browar, Poznań

Bonarka, Kraków

PRCH Retail Research Forum, H1.2014

Złote Tarasy, Warszawa

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POLAND RETAIL MARKET Vacancy rate by city, H1. 2014

VACANCY  only 3% vacancy rate in shopping centers in 15 largest cities

4,0% 3,5% 3,0% 2,5% 2,0%

 Lowest rates in Warsaw, Szczecin, Wrocław, SIlesia

1,5% 1,0% 0,5% 0,0%

RENTS  In Warsaw average rents in prime shopping centers are at the highest level in Poland, which reflects the strongest demand from tenants generating high turnovers.

 High street retailers are primarily focused on service sector (banking, catering) or upscale fashion, recording rents of €80-90 per sqm per month in prime locations in Warsaw. @confimprese #RetailBusinessPolonia

Source: PRCH Retail Research Forum, H1.2014 Prime rents by size of unit in selected Polish agglomerations €/sqm/mth 100 90 80 70 60 50 40 30 20 10 0

0-50 sqm

Silesia

50-150 sqm

Warsaw

Source: BNP Paribas Real Estate

150-500 sqm

Poznań

Kraków

POLAND RETAIL MARKET No. of open SC

GLA per 1,000 inhabitants

Warsaw Krakow

43

567,4

Arkadia, Galeria Mokotów, Złote Tarasy

15

536,0

Bonarka, Galeria Krakowska, Galeria Bronowice

Łódź

14

512,1

Manufaktura, Port Łódź, Galeria Łódzka

19

761,5

Magnolia Park, PH Bielany, Pasaż Grunwaldzki,

18

757,3

Stary Browar, Galeria Malta, Poznań City Center

25

670,8

Riviera, Galeria Bałtycka, Klif Gdynia

43

493,6

Silesia City Centre, Galeria Katowicka, Forum Gliwice

11

494,5

Kaskada, Galaxy, Atrium Molo

Agglomeration

Wrocław Poznań Tricity: Gdansk, Gdynia & Sopot Katowice (Upper Silesia) Szczecin

Major shopping centres

MAJOR AGGLOMERATIONS – SHOPPING CENTRES

PRCH Retail Research Forum, H1.2014

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SOME OF THE BRANDS IN THE POLISH SHOPPING CENTRES THE MOST POPULAR POLISH BRANDS

INTERNATIONAL BRANDS

NEW BRANDS

ABSENT ON POLISH MARKET

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SOME OF THE BRANDS IN THE POLISH SHOPPING CENTRES

HIGH STREETS IN MAJOR CITIES More details you will

find here: [PDF]

RETAIL STREETS Retail streets mainly in the 10 largest cities, Most known are in Warsaw, Kraków, Wrocław, Łódź Poles still prefer to visit shopping centres and spent more time

there but more retailers and consumers tend to consider the streets again

@confimprese #RetailBusinessPolonia

HIGH STREETS IN WARSAW HIGH STREETS IN WARSAW ?

THE W ORLD’S 10 MOST EXPENSIVE RETAIL LOCATIONS IN EACH COUNTRY RA RAN COUNT CITY LOCATION €/SQ. US$/ % NK K RY M/YE SQ. CHANG AR FT/Y E 201 2013 EAR 4 IN LOCAL MEASU RE 1 -* USA New Upper Fifth 29,82 3,500 13.3 York Avenue 2 2 1 Hong Hong Causeway 23,30 2,735 -6.8 Kong Kong Bay 7 (China) 3 3 France Paris Avenue des 13,25 1,556 0.0 Champs 5 Élysées 4 4 UK London New Bond 10,36 1,216 4.2 Street 1 5 8 Australia Sydney Pitt Street 8,658 1,016 25.0 Mall 6 6 Italy Milan Via 8,500 998 13.3 Montenapo leone 7 5 Japan Tokyo Ginza 8,120 953 6.9 8 9 South Seoul Myeongdon 7,942 932 17.6 Korea g 9 7 Switzerl Zurich Bahnhofstra 7,456 875 1.1 and sse 10 12 Russia Mosco Stoleshniko 4,749 557 20.0 w v 44 45 Poland Warsa Nowy Swiat 1,020 120 2.4 w Source: Cushman & Wakefield (Lists only one location in each country – full ranking contained in the report)

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HIGH STREETS IN MAJOR CITIES „HOW OFTEN DO YOU SHOP HERE?” 0 shopping centers retail streets dicounts and supermarkets small stores and passages

10

20

30

40 Everyday Few times a week Once a week Few times a month Once a month

small markets

Warsaw, Nowy Świat

Internet

Less than once a month Do not shop here

other places @confimprese #RetailBusinessPolonia

HIGH STREETS IN WARSAW HOW MUCH TIME A CONSUMER SPEND THERE?

RETAIL MIX IN WARSAW

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ReDI Trade Fair, RETAIL DESTINATION INITIATIVE June 10-11, 2015 | National Stadium | Warsaw

10-11.06.2015 | NATIONAL STADIUM| WARSAW| REDI.ORG.PL

ReDI 2015 – WHY IS IT WORTH TO PARTICIPATE? The ReDI Trade Fair, Retail Destination Initiative, is an European meeting place for representatives of towns and cities, property developers and retail chains that have a development strategy for the region of Central and Eastern Europe. The next edition of the ReDI Trade Fair will be held on 10th and 11th of June 2015, at the National Stadium in Warsaw.

ReDI IS:  A venue for presenting new shopping centre projects in Poland and other CEE countries  A centre for supporting expansion of retail chains interested in investing in Poland and other CEE countries  A platform for supporting and developing shopping streets in Poland  A venue for presenting new services and technologies that support business  2 days of intensive business meetings on exhibition stands  Presentations and panel discussions at the conference centre  Networking among top management representatives  Tools supporting business development

10-11.06.2015 | NATIONAL STADIUM| WARSAW| REDI.ORG.PL

ReDI 2015 – WHY IS IT WORTH TO PARTICIPATE?

ReDI TRADE FAIR CATCHMENT AREA: POLAND CZECH REPUBLIC SLOVAKIA LITHUANIA LATVIA ESTONIA ROMANIA

HUNGARY

10-11.06.2015 | NATIONAL STADIUM| WARSAW| REDI.ORG.PL

ReDI 2015 – WHY IS IT WORTH TO PARTICIPATE?

FIRST EDITION OF THE ReDI TRADE FAIR IN NUMBERS:

1400+

PARTICIPANTS

550+

INVESTORS, DEVELOPERS, ASSET AND PROPERTY MANAGERS

350+

RETAILERS

50+

EXHIBITORS FROM POLAND AND OTHER CEE COUNTRIES

50+

MEDIA

20+

CITY COUNCIL AND LOCAL GOVERNMENTS AUTHORITIES

5%

23%

30%

10% 14%

10-11.06.2015 | NATIONAL STADIUM| WARSAW| REDI.ORG.PL

18%

ReDI 2014 –EXHIBITORS & SPONSORS

10-11.06.2015 | NATIONAL STADIUM| WARSAW| REDI.ORG.PL

PATRONAGE CITIES

PATRONAGE ORGANIZATIONS

10-11.06.2015 | STADION NARODOWY| WARSZAWA| REDI.ORG.PL

PATRONAT MEDIA

10-11.06.2015 | STADION NARODOWY| WARSZAWA| REDI.ORG.PL

THANK YOU FOR YOUR ATTENTION! CONTACT: Radosław Knap Deputy General Manager Polish Council of Shopping Centres [email protected] + 48 512 402 291

Polish Council of Shopping Centres Nowogrodzka 50/54 00-695 Warsaw, Poland [email protected] +48 22 629 23 81

www.prch.org.pl @confimprese #RetailBusinessPolonia

10-11.06.2015 | NATIONAL STADIUM | WARSAW | REDI.ORG.PL