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JLL announces Europe’s most attractive retail destinations​

JLL ranks London as the most attractive European city for international retailers, Prague has moved to the mature market category

PRAGUE, 17 DECEMBER 2014 – Prague is now a mature retail market alongside Barcelona, Vienna and Brussels according to a new report entitled Destination Europe 2015 which analyses the expansion and presence of 250 international retailers across 57 key retail markets.

“Prague has moved from a growth retail market into the mature market category thanks to its stable economy, growing spending power and significantly improved market transparency. In addition, Prague is a major tourist destination, having attracted 4.75 million international visitors last year, a fact that TripAdvisor confirms with Prague having been recognised as the World 5th Best Travel destination in 2014. Thanks to all these factors, Prague has managed to join some of the top leading European cities in the mature category,” says Beatrice Mouton, Head of Retail Agency CEE at JLL.

According to the report, Prague is the 14th most attractive European location for international retailers with London leading the chart followed by Paris and Moscow. Prague has outperformed cities such as Vienna, Brussels, Frankfurt or Zurich and is the first among CEE cities.

Although Prague is a mature market, it still has potential to grow further compared to cities such as Vienna, Frankfurt and Zurich, especially in terms of retail sales. As shown in the report, these cities can expect a retail sales growth of circa 5% to 10% whilst the retail sales growth forecast for Prague is at least 15%.

“Whilst Vienna, Frankfurt and Zurich have been well established retail markets for longer than Prague, they are more competitive with strong national brands that are not willing to give the floor to their international counter parts. Securing space in these cities for international retailers is more difficult and expensive, with competition being fierce for the best locations. The Czech Republic has few national brands, particularly in the fashion, footwear and accessories sector, giving an opportunity to international brands to fill in this particular void. Many international brands are still missing in the Czech capital, hence the attraction to come. Prague's established, compact and maturing retail high streets is another benefit and incentive to retailers to capture the spend from tourists, residents and office workers,” explains Beatrice Mouton.

Europe’s retail powerhouses continue to surge ahead
“For international retailers looking for springboards into Europe, London leads the pack. Its retail market size, maturity, high degree of market transparency and retail friendliness make it a magnet for international retailers who are willing to pay a premium for the best locations. Other major global and mature European cities with similar appeal including Paris, Milan, Rome and the main German retail cities have similarly benefitted from international retailers’ thirst for growth and have attracted new brands despite continued headwinds plaguing Europe’s economy,” according to James Brown, Head of EMEA Retail Research & Consulting at JLL.

London has also increased its lead on Paris as the most attractive destination for luxury retailers in Europe. The report shows that there is clear water between these two world-renowned retail locations and the rest of Europe. This goes some way towards demonstrating the value luxury retailers place on having presence in iconic retailing locations and the scarcity of supply. As a consequence, retail space in New Bond Street can command the most expensive headline rents in Europe at €12,300 per sq m per year - an astonishing 42% growth on the levels achieved in 2012. When we compare this rent to Prague´s €2,160 per sq m per year, it is almost six times higher.

Moscow and Istanbul growing fast
The transitional markets of Moscow (3rd) and Istanbul (7th) have become Europe’s retail success story - no two cities have attracted as many new entrants over the past two years. Despite the increased levels of geo-political risk, Moscow’s retail market is thriving upon its sheer market size, fast rising levels of disposable incomes and rapidly growing shopping centre stock. Istanbul’s retail market is also revolutionising at great speed. Attracted by its modern high quality shopping centre stock such as the Zorlu Centre and the announcement of Galeries Lafayette anchoring Emaar Square, an increasing number of retailers are considering Istanbul as a first point of entry to Europe.