The new shopping centres planned for the next few years will add more than 100,000 square metres of retail space in Estonia's capital Tallinn and Estonian Real Estate Companies Union CEO Tõnis Rüütel estimates that this will result in a market war that has to be paid for by the consumer, LETA/Public Broadcasting reports.
There is already nearly 2 square metres of retail space per resident in Tallinn and new centres are being built. For example in a few years time, the Panorama City shopping centre with over 50,000 square metres of rental space is being erected in Lasnamäe and the Peterburi Rd shopping centre should be completed and Ülemiste Centre is also expanding considerably.
Marcel Kokkeel, CEO of the current retail space leader in Tallinn, Citycon, the owner company of the Rocca al Mare and Kristiine shopping centres, says that there will be enough clients for the new centres but developers of projects should think their plans through well.
"If I was an investor planning to open a new shopping centre, I would think hard about this step," said Kokkeel.
The central Tallinn Viru Shopping Centre board member Ants Vasar said, commenting upon whether there is enough purchase power of people to make the centres profitable, that turnover of retail trade grows every year. "Considering that a proper shopping centre's turnover is 100 million a year, 1.5 or 2 shopping centres a year could be added, provided that all other turnovers remain unchanged. Purely mathematically speaking, there is space," he said.
Estonian Real Estate Companies Union CEO Tõnis Rüütli said that increase of retail space results in price war. "It is really stupid, at the end of the day we will pay for it. It could be assumed that if there is a competitor right next to you, it could bring the prices down. In reality that is not the case. In reality all of them have their expenses and you, me all of us pay for it. It is truly stupid and a market war," said Tõnis Rüütel.