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Major changes set for Albanian retail market

Colliers Albania has recently published its Research and Forecast Report for Albania. The report covers the country’s real estate market, based on successful transactions of hotel, retail and office assets as well as covering the supply, demand, rental levels, pipeline and prognosis.

Supply
The official opening of Toptani Shopping Center in March 2017 has significantly impacted the retail market in Tirana which had remained unchanged for the last two years. Taking in consideration its excellent location in the city center, as well as its high quality construction, Toptani has entered the market as one of the major shopping centers in Albania next to Tirana East Gate (TEG), Qendra Tregtare Univers (QTU) and Tirana Ring Center (TRC).

With the entrance of Toptani Shopping Center the overall shopping center stock in Tirana at H1 2017 has increased by 24,000 sqm reaching in total to 202,800 sqm. This new stock increase has also effected the shopping center vacancy rate recorded to be 2.76 percent compared to 2.07 percent in H2 2016. The rent negotiations are mostly done on an ad-hoc basis.

Demand
The year marked again the increasing success of the shopping malls towards high streets. Apart from attracting existing retail companies in the market like LC Waikiki, DeFacto, Calzedonia, Jysk, Adidas etc, Toptani Shopping Center has achieved to bring into the Albanian market new international brands like Intimissimi, Well, Gentli shoes, Satur and Comodita Home. Additionally, few international retailers are aggressively expanding their presence not only in Tirana, but also in other main cities of Albania.

Rents
Tirana’s average shopping center rents currently stand at approximately €22/sqm/month, being slightly increased from €20/sqm/month in H2 2016. Prime headline rents have also been increased to €55/sqm/month compared to €50/sqm/month in H2 2016. Such changes have occurred due to the new shopping center (Toptani Shopping Center) entering the market. The market continues to be landlord driven, especially for prime retail spaces and shopping centers that hold good brands and can offer the retailers a high number of customers.

Prime High Street rents have encountered an increase in H1 2017 amounting €48/sqm/month from €40/sqm/ month. Additionally, like in H2 2016 the gap between the highest and the lowest rents where the lowest is registered at €6/sqm/month and the highest at €48/sqm/month continues. This is due to buildings age and conditions in high streets along with the alignments of retailers category.

Pipeline
Qendra Tregtare Univers (QTU), the first and one of the well-known shopping centers in Albania, is expected to increase its total build-up area with 14,000 sqm. Once completed, this additional retail space will increase the overall shopping center stock by offering to the clients more retail possibilities and services particularly to those customers located in the Western side of Tirana. In addition, Arena Kombetare stadium projected to be completed in 2018 is expected to also increase the retail space.

Prognosis
With the opening of Toptani Shopping Center in H1 2017 and the extension of QTU retail space, the shopping center submarket will soon achieve its saturation point.

In addition, Tirana real estate market is expected to encounter major changes with the approval of the new master plan of the city. Based on the available information, many of the projects to be constructed in Tirana (Downtown Tirana, Eyes of Tirana, Arena Kombetare etc) will contain retail areas which are forecasted to impact significantly the retail market stock once completed. Well managed shopping centers will continue to generate the necessary customer traffic to achieve success.

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