Key points

•In 2018 GDP increased more than 3.0% y/y for the second consecutive year in the Baltic states.

•The labour market continues to heat up as the unemployment rate has decreased and salaries have been hiked across the Baltics.

•In 2018 Estonia observed 4.7% y/y higher private consumption expenditure, Latvia followed with 4.5%, and Lithuania with 3.9%.

•Inflation in the region is expected to moderate at the ca. 2% level in 2019 and 2020.

•In 2018 retail turnover increased by 6.8% y/y in Lithuania, 5.1% in Latvia, and 4.8% in Estonia. Sales of electronic household appliances, pharmaceuticals, communication, and recreation goods were the most notable.

•Results of the leading shopping centres were mixed. It was mainly due to ongoing multiple refurbishments, renovations, and expansions.

•Competition among grocery stores as well as home improvement retailers is intensifying. New and existing players are intensively opening new sites.

•Largest apparel retailers are restructuring portfolios to increase efficiency in the brick and mortar distribution channel.

•In 2018, a single shopping centre was commissioned in the Baltics. T1 Mall of Tallinn, which is located just next to the Ulemiste shopping centre in Tallinn, adding 55,000 sq m of new retail stock.

•In April 2019, Akropole Riga was launched. The shopping centre adds 62,000 sq m to the total retail stock.

•Prime high street retail rents averaged at ca. EUR 30-60 sq m per month. At the same time, space in prime shopping centres averaged at ca. EUR 35-40 sq m per month.

•In 2018, investment volume in retail properties increased by 3%. A few large transactions sustained the investment pace in the retail sector.