RETAIL SERVICES GLOBAL CITIES RETAIL GUIDE 2012/2013
Overview Photo / williamsdb on Flickr Belgium is a relatively small but very international market with a population of 11 million and above European average retail spend per capita. Belgium is a mature and competitive retail market, where consumers have traditionally been receptive to new concepts and formats; as a result the number of cross-border retailers is very high in this market. With its central location in Europe and with as well Germanic languages (Dutch and German) as French being spoken, it is often seen as an ideal test market for new entrants into the European retail scene. Retail in Belgium is characterized by a healthy balance between high street locations, retail warehousing and shopping centers; as a result demand for prime retail locations held up very well, even over recent years of economic crisis. Shopping center provision in Belgium is below the European average; this is due to severe planning procedures especially for out-of-town projects, inspired by public actors willing to preserve the attractiveness of city centers. In the retail warehouse sector Belgium has a proportionally large stock of hypermarket and solitary retail warehouse shops; retail parks are coming up but only recently during the last decade; some retail parks were purpose-built but several were the result of re-planning existing hypermarket locations into retail parks.
Economic Overview Photo / sarastierch on Flickr economic summary ECONOMIC INDICATORS* 2009 2010 2011 2012F 2013F GDP growth -2.7 2.2 2.0 0.0 0.7 Consumer spending 0.8 2.3 0.9 0.1 1.1 Industrial production -11.9 8.4 4.2-1.0 1.5 Investment -7.9-1.0 5.2 0.0 2.5 economic breakdown Population 10.91 million (2011) GDP US$513.2 billion (2011) Public sector balance -3.87% of GDP (2011) Parliament A six-party coalition government made up of Flemish and Walloon Socialists, Liberals and Christian Democrats Unemployment rate (%) 7.9 8.3 7.2 7.5 8.0 Inflation -0.1 2.2 3.5 2.9 2.0 Head of State Prime Minister King Albert II Elio Di Rupo US$/ (average) 1.39 1.33 1.39 1.27 1.28 US$/ (end-period) 1.44 1.34 1.29 1.26 1.29 Interest rates: 3-month (%) 1.2 0.8 1.4 0.7 0.5 Interest rates 10-year (%) 3.9 3.5 4.2 3.5 3.8 NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast Source: Oxford Economics Ltd. and Consensus Economics Inc Election dates 2014 (Legislative) retail sales growth: % change on previous year Belgium 2009 2010 2011 2012F 2013F Retail Volume 0.44% -0.58% 0.83% 1.11% 1.38% Retail Value 0.09% 1.87% 3.39% 2.30% 2.51%
Largest cities largest cities (2011) CITY POPULATION Brussels 1,120,000 Antwerp 494,000 Ghent 248,000 Liège 195,000 Charleroi 204,000 Bruges 117,000 Namur 110,000 Mons 93.000 Source: statbel.fgov.be
Retail Scene MAJOR DOMESTIC FOOD RETAILERS Colruyt, Delhaize, Match, Champion, Cora MAJOR INTERNATIONAL FOOD RETAILERS Carrefour, Albert Hein, Intermarché MAJOR DOMESTIC NON-FOOD RETAILERS Cassis/Paprika, L&L/Appel s, AS Adventures, Euroshoe/Advance, Celio INTERNATIONAL RETAILERS IN BELGIUM H&M, Inditex (Zara, Bershka, Massimo Dutti, Pull & Bear, etc.), Primark, Mediamarkt, Forever 21, Desigual, Ikea, Mango, Superdry, Springfield FOOD & BEVERAGE OPERATORS Exki, Quick, Starbucks, Pizza Hut, Lunch Garden, Mc Donald s TYPICAL HOURS MONDAY-FRIDAY SATURDAY SUNDAY 09.00-18.00 09.00-18.00 10.00-16.00 ( only in tourist towns) Photo / chatirygirl on Flickr
Retail Scene Total existing stock of shopping center space in Belgium totaled about 1.25 million sq.m. GLA as at Jan. 1, 2012. Shopping center stock in Belgium is characterized by the limited number of large schemes in comparison to other European markets. Department store-anchored schemes with catering and/or leisure elements as well as retail are the dominant format. Permits for large out-of-town schemes are difficult to obtain. Belgium traditionally is a well developed retail warehouse market, characterized by hypermarket schemes and a large number of solitary retail warehouses. Development and re-development of retail parks has been active, especially over the last decade. The market is active and has seen an increasing number of retailers entering the market from sectors such as fashion, shoes, electro and sports goods. New space coming onto the market is limited given the planning restrictions. Belgium s factory outlet center market is modest and typically located in remote locations away from city centers; only one large factory outlet center is successful (Maasmechelen Village near the borders with Germany and the Netherlands). E-commerce has developed less rapidly in Belgium than in most other EU countries. This is mainly due to the proximity of physical stores from almost all locations in this densely populated country. It is possible to enter Belgium retail market direct, though many also franchise and enter via concessions/shop-in-shops. There are no restrictions on foreign companies either buying or renting property in Belgium. The Belgian economy is very open and one of the most international markets in Europe. Rents have proven to be extremely stable over the last decades and certainly less volatile than in most other markets. Lease terms are believed to have found a good balance between tenant and owner needs. Although it is possible to occupy a new building within a few weeks, it is more realistic to expect that on average it will take about 6 months from initializing the property search to taking occupation of an existing property. This includes time for considering location options, the identification of buildings or sites, negotiating leasehold or freehold terms, obtaining of eventual permits and drafting of the appropriate legal documentation. new entrants to the market Calzedonia/Intimissimi Kaporal Tara Jarmon Maje Forever 21 Apple Abercrombie & Fitch, Hollister Primark Disney Store Hard Rock Café
Key Features of Lease Structure KEY FEATURES OF LEASE STRUCTURE Lease Terms Rental Payment Rent Review Service Charges, Repairs and Insurance Property Taxes and other costs Disposal of a Lease Valuation Methods Any lease agreement must be registered at the Ministry of Finance, Bureau de L Enregistrement and is subject to registration duty. The contract is legally binding and enforceable by the tribunals of Brussels or other appropriate legal authority throughout Belgium. On signing the lease the tenant waives some rights for recourse from the landlord, with exception of cases of malevolence. The tenant is responsible for the registration of the lease. Minimum lease term is 9 years, maximum of 99 years. Both parties are free to negotiate longer leases. Early Termination: only be break clause which is possible every 3 years by the tenant, or in common consent between parties. Rents are typically payable quarterly in advance, A bank guarantee of between 3 to 6 months is given by the tenant.. Rent reviews are done annually: the annual indexation is done in line with the Health Index (an adjusted consumer price index). Normally the landlord will recalculate the rent annually; in case of deflation the tenant has to send a notice of rent decrease to the landlord, if the contract allows it; most contracts do not allow rent decreases. The tenant normally has the right to renew for a further three terms of 9 years but must adhere to a strict procedure. Exceptions to the tenants right to renew are where the property is required for the owner s occupation, where the owner wishes to redevelop, or where there is a better offer from a third party which the tenant is not prepared to match. Service charges are not normally included in the rent. Unless stated otherwise, these charges are paid by the tenant. Repairs: the tenant pays internal repairs, the landlord structural repairs Insurance is a tenant obligation. The property tax précompte immobilier is payable annually and calculated on the basis of the revenue cadastral, the rateable value attributed to the property in the cadastral register. It applies to the whole of Belgium, but the tax differs from one region, province and municipality to another. There is no VAT payable on rent. Assignment and Sub-letting: the tenant is usually prohibited from assigning or subletting without the landlord s consent. However for retail, the tenant has the right to sell or sublet the lease with the business goodwill, provided the nature of the business remains the same. Tenant Liability: none following disposal of the lease. However, the tenant is liable in the event of incoming tenant failure in the case of assignment. The tenant must reinstate the premises in the original state, including removal of fittings and fixtures. Early Termination: only by break clause which is possible every 3 years by the tenant, or in common consent between parties. Measurement Practice: middle of the wall to middle of the wall. The market rents of high street shops are valued on a zoning basis. This principle recognises that the area at the front of the shop, adjacent to its primary window frontage and covering the surface 10 meters back from there (normally referred to as Zone A ) is the most valuable in rental terms. The rent per square metre decreases towards the back of the shop, with Zone B valued at rent zone A /2 for the next 10 meters and Zone C valued at rent zone A /4 for the remaining meters. The eventual upper/lower sales floors are similarly valued as a proportion of the Zone A rate. Storage areas are considered to be necessary for the running of the commercial activity, and will usually not be assigned any significant value, but are taken into account when determining the Zone A rent. There will occasionally be local variations to these rates, which will also depend on the quality and functionality of the accommodation, relative to the market norm. Legislation The legal structure of property in Belgium is based on the Civil Code, and there are a number of main types of title to property: Retail: bail commercial, April 1951; Office/Industrial: Articles 1714 to 1762 of the Civil Code. No restrictions on foreign ownership of commercial property. Shops of more than 400 sq.m. require a socio-economic permit in case of a new shop or when the nature of the shop changes. This legislation will pass from federal level to the 3-regions level over the coming years.
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