The Prishtina Mall, billed as Southeast Europe’s biggest shopping centre, opened in Kosovo’s capital earlier this month, as investment into malls across Southeast Europe is going strong. 

Reports from the region show that demand for new modern retail space remains high, especially in smaller markets, and outside the capitals and major cities in more established markets like Romania. 

This is despite the economic turmoil of the last few years, caused by first the coronavirus pandemic and related lockdowns, and more recently by rampant inflation that has pushed up the cost of consumer goods and eroded disposable incomes across much of the region – not to mention bomb hoaxes in several countries that have forced frequent evacuations of malls and other public buildings. 

Prishtina Mall opens for business 

The Prishtina Mall in Kosovo’s capital, managed by real estate business Sonae Sierra, opened its doors for visitors on March 9.

The shopping centre, located 10 km from the capital of Kosovo, is positioned as a regional centre that will serve the entire surrounding area of the Balkans. Sonae Sierra, which also operates in Croatia, Romania, Serbia and Slovenia, claims that the Prishtina Mall is the largest shopping centre in Southeast Europe.

The mall has a mix of well-known international brands, a cinema, playground, food hall and more than 3,500 parking spaces, and a gross leasable area of 115,000 square metre.

Expanding in the Western Balkans 

In neighbouring Albania, the largest local mall, Tirana East Gate (TEG), is being expanded with a loan from the International Finance Corporation (IFC), part of the World Bank Group, as announced by the Balfin Group in December, when the agreement was signed.

The size of the loan was not disclosed but Balfin said it will be used for the expansion of the mall, funding its extension and refurbishment, and the production of green energy via solar panels.

Tirana East Gate was set up in 2011 and is the biggest shopping mall in Albania.

IFC’s regional director for Europe, Rana Karadsheh, commented that the investment will help develop Albania’s retail infrastructure and create new jobs, signalling “the confidence of IFC in Albania’s long-term perspectives for socio-economic development”. 

Balfin, an important regional player in several Western Balkan countries, previously opened North Macedonia’s biggest mall, East Gate Mall, in Skopje in 2021, just as the sector was bouncing back from the corona crisis. 

Also in Skopje, Turkish Limak Holding is set to open Diamond Mall in the near future as part of the €250mn Diamond of Skopje multi-purpose complex. 

Outside the capital, the La Plaza mall in Kumanovo is being developed by local company Liko Proekt and is an integrated concept for housing, shopping, food and entertainment, with a gross built area of 56.538 sq metres, of which 18.398 sq metres will be a shopping centre.

Among the tenants are Greek retailer Veropoulos, which is expanding its presence in North Macedonia and announced plans for a Vero supermarket and Jumbo toy and homewares store at the La Plaza mall, as well as outlets at the Diamond shopping centre. 

Even the region’s smallest country by population, Montenegro, has attracted investment from Israel's BIG Shopping Centers, which completed the acquisition of Delta City Mall Podgorica for €95mn in 2022. In May 2022, Prime Minister Dritan Abazovic said BIG plans to expand its business in Montenegro and create 1,000 new jobs. 

Like investors in several other countries in the region, BIG is looking outside the capital for future investments. “After the acquisition of Delta City Mall Podgorica, BIG announced the expansion of its business to Bar, Kotor and Niksic," Abazovic said in a tweet.

In Serbia, consultancy CBRE described the opening of new retail space as “sporadic” in 2022, though pointed to the openings of the AVA Shopping Park in Belgrade and the smaller TC Prozivka centre in Subotica in the north of the country. 

However, it added that the pipeline of new projects “remains stable across the country”, and “when it comes to the secondary cities, the activity has remained high”. 

BIG CEE is active Serbia, where it has announced the expansions of projects in India, Kragujevac, Krusevac and Zrenjanin, as well as a new project in Pazova and the BIG Cacak retail park.

New brands arrive in the region

Major international brands have long been present in the region’s EU members. Now the major malls in the capitals of the EU-aspiring Western Balkans also host a variety of the big mass market brands. As incomes increase, it has become more attractive for international brands – among those at East Gate Mall, for example, are the portfolios of international fashion retail groups Inditex Group and LLP – and there is strong demand for modern retail space.

Among the recent developments, the first H&M store opened in Albania at the Tirana East Gate mall on March 20. This follows the opening of the first H&M store in North Macedonia, at East Gate Mall in Skopje, in August 2022. 

Primark, while less visible in Southeast Europe than H&M or the Inditex portfolio of brands that includes Zara, has also been expanding in the region. It made its first foray into the broader Central and Eastern Europe with the opening of its Ljubljana store, and launched in Romania in 2022. 

Last year, it was just one of 17 retailers that opened their first stores in Romania in 2022, among them Converse, JD Sports, Bath & Body Works, Popeyes, Poke House, and Submarine Burger. 

In the homewares store, Ikea has been gradually expanding, starting with the larger markets such as Romania, then gradually moving into less populous countries. It currently has a presence in the four EU members in the region plus Serbia.

Focus on smaller cities in Romania 

While large, modern malls open in the Western Balkans, bringing new brands to the region, in the more mature markets of Southeast Europe’s EU member states the focus has been on opening new malls in secondary and tertiary cities that are less well served than the capitals. 

Real estate consultancies forecast a strong year for Romania’s retail sector in 2023. Colliers expects the volume of retail projects in Romania to hit a 12-year high this year, with scheduled deliveries of around 260,000 sq metres of modern retail projects. 

This is a considerable uplift compared to 2022, which saw limited deliveries of new modern retail projects, adding only 77,000 sq metres to the overall existing retail surface, about half the initially estimated delivery, the consultancy said in a report on the sector. Nonetheless, most retail categories registered good results in 2022 and the profitability level in Romania remains one of the highest in the European Union. 

CBRE, meanwhile, is even more bullish about Romania’s retail sector in 2023. It says in its outlook for 2023 that another 265,000 sq metres are expected to be added to the country’s modern stock this year. 

Of this total, CBRE says more than three-quarters is being developed as a retail park format, out of which the overwhelming majority of 93% will be in secondary and tertiary cities that are not big or rich enough to support a shopping centre. 

“Even if the capital city hosts enough space for retailers to grow, the advance of retail schemes in Bucharest seems to embark on a slower pace, as regional cities attract local and internationally known investors,” CBRE commented. “The closeness to end-users and the untapped territories by established retailers reveal small-sized towns throughout the country as the new places to pinpoint on their expansion map.” 

Real estate developer Prime Kapital and its investment partner MAS PLC, a green property investor and operator focused on retail properties in CEE, said in September 2022 that they plan to invest €1.97bn in retail, office and residential developments in Romania by 2029.

Their joint venture plans to invest €517mn in developing or extending enclosed and open-air malls in 10 cities across Romania: Alba Iulia, Baia Mare, Brasov, Bucharest, Cluj-Napoca, Giurgiu, Iasi, Pitesti, Roman and Slobozia.

Among these is the Era Shopping Centre in Iasi, northeastern Romania, which is being rebranded as Mall Moldova and expanded into what Prime Kapital describes as a “super-regional mall” serving both eastern Romania and neighbouring Moldova, with estimated catchment area of approximately 644,000 inhabitants within a 60-minute drive. Construction works started in November.

In another recent development, in January NEPI Rockcastle borrowed €60mn to upgrade its Ploiesti Shopping City mall in Romania. 

CBRE’s country reports for the other EU members in the region – Bulgaria, Croatia and Slovenia – indicate a similar pattern of investments into modern malls and retail parks outside the capitals, with a strong pipeline of projects in smaller cities. 

For example, the consultancy describes the retail sector in Bulgaria’s capital Sofia as “stagnant” throughout 2022, but points to the launch of retail park projects “across the country”, with destinations including the towns of Haskovo, Karlovo, Elin Pelin and Dupnitsa.