Baltic States Retail Outlook, 2023 Q2

Building: Retail Park UNA Baltic States, 2023 Q2 Developer: VPH

Vilnius Retail Market Consumers' growing buying power will help 2023 Q2 to win them back Key Indicators Q-o-Q Y-o-Y Forecast Retail statistics 7.4 billion € - Retail is the most dynamic and reactive - SC managers main priorities remain 8.9 % real estate segment. Consumer moods constant renewal of tenants and providing Turnover, YTD quickly propagate and impact daily results. the best possible service to ensure Growth, YTD - Growth of retail turnover has been customer satisfaction. At the same time, slowing for more than a year. That trend sustainability is becoming an increasingly Segments, 13.6 % intensified in Q2 2023, when total turnover important topic. growth YTD 15.0 % only grew 5-6%. With inflation still high, - Environmentally and people-friendly 24.9 % that means the change in the volume of ideas need to be prepared and Food, beverages, tobacco 23.6 % goods sold has been negative. implemented on time to maintain and Fashion - Among successful segments where improve the value of a property. New Restaurants nominal turnover is growing we still see shopping centres invest immediately, E-commerce restaurants, fashion goods, and food and while older ones are not far behind, mainly beverage. E-commerce is also showing in the area of energy. Vacancy 2.5 % surprisingly good results so far in 2023. In any case, Q2 saw a more significant \"Slowing turnover Total slowdown in both the number of growth is expected to customers and turnover growth. shift direction in the Rent rates by area 7-28 €/sqm - In June, Lithuania's annual inflation 13-38 €/sqm finally fell back below 10%, and purchasing second half year\" Large 22-70 €/sqm power finally started to increase. The job Medium market remains strong and wages are still Small growing significantly, though rising interest rates, will negatively affect the Yields consumer market. Prime 7.00-7.50 % Kristina Zivatkauskaite Secondary 7.50-7.80 % Senior Analyst [email protected] Statistics source: Statistics Lithuania, YTD: Jan-May 2023 for Lithuania

Tallinn Retail Market 2023 Q2 Key Indicators Inflation is declining Q-o-Q Y-o-Y Forecast Retail statistics 4.2 billion € - Inflation in the Eurozone has decelerated - On the positive side, salaries in Estonia 2.1 % but is still higher than 2%. As a result, the are increasing, which eventually will start Turnover, YTD ECB can be expected to continue raising to provide support for consumption. Growth, YTD interest rates, but at slower pace than previously. - Viru Keskus finished its largest interior Segments, 12.7 % renovation in May 2023. The renovation growth YTD 5.1 % - So far, labour market has stayed stronger took place in multiple phases, which than expected. A strong job market makes started during the time of COVID-19. The Food, beverages, tobacco 26.7 % it harder to fight high inflation, so we may building itself underwent renovation, and Fashion 0.7 % thus see high interest rates for a longer new concepts and brands were introduced Restaurants period. as well. E-commerce - Higher interest rates and very high \"Eurozone inflation Vacancy 4.0 % inflation have left their mark on shows signs of slowing, consumers. Retailers turnovers are in but the fight to get back Total decline as people are spending less due to elevated prices. The trend is widespread to 2% continues\" Rent rates by area 10-17 €/sqm across most segments and with few 12-30 €/sqm exceptions. In May 2023, internal Large 20-55 €/sqm consumption shrank by around 10% in real Medium terms. Small Mihkel Männik Yields 7.00-7.25 % Analyst 7.50-8.00 % [email protected] Prime Secondary Statistics source: Statistics Estonia, YTD: Jan-May 2023 for Estonia

Riga Retail Market Groceries are becoming luxuries 2023 Q2 Key Indicators Q-o-Q Y-o-Y Forecast Retail statistics 4.3 billion € - Consumer prices continue to increase - Grocery retailer Lidl is expanding and 7.8 % significantly. As of the end of H1 2023, taking market share. According to results Turnover, YTD inflation stood at 18.4%. Energy prices for the last financial year published at the Growth, YTD have risen the most for consumers, with end of Q2 2023, turnover of over EUR 442m natural gas prices up nearly 90%, heating gave the chain a current grocery market Segments, 12.7 % energy up 62% and electricity up 62%. share of 10%. That growth was mainly due growth YTD 11.9 % Food prices have grown 24.3%, while the to expansion in Riga and all over the 123.7 % prices of bread, wheat and other cereals country. Factors behind Lidl s fast growth Food, beverages, tobacco 6.9 % jumped 36% and milk products are up 27%. and popularity include its competitive Fashion - Retail vacancies have decreased slightly, prices and good customer service. Higher Restaurants though no significant upward trends can wages and better employment conditions E-commerce be seen in the market yet. Properties with than at most other grocery retailers are increasing vacancy will need to adjust their further boosting Lidl s reputation. Vacancy 11.0 % business models, including renovations, tenant changes and other enhancements. \"The retail investment Total - As in Q1, there were no significant retail market is still quiet\" investment deals in Q2 2023. Rent rates by area 10-26 €/sqm - Retail projects currently in planning and 24-28 €/sqm development are mostly small to medium Large 30-55 €/sqm in size. Developers are focusing on Medium securing a few anchor tenants including a Small grocery retailer, which is what brings the most customers to such shopping centres. Yields 7.20-7.25 % Inita Nitiša 7.60-7.80 % Real Estate Economist Prime [email protected] Secondary Statistics source: Statistics Latvia, YTD: Jan-May 2023 (e-commerce: Jan-Apr) for Latvia