Making profits from shopping malls is becoming more difficult
19:42
Poland’s retail park construction boom faces pressure from rising building costs and limited scope to increase rents, potentially reducing returns on new projects. Grzegorz Pękalski, a management board member at Karuzela Holding, said rents negotiated for new retail parks remain at levels seen a decade ago because tenants have strong bargaining power. Existing leases, by contrast, are subject to indexation, allowing income from operating properties to rise.
Although retail parks remain cheaper to build than shopping malls, Pękalski warned that declining profitability could slow future investment. He said bank financing is not currently a major barrier, although lenders require documentation, valuations and evidence of a project’s potential.