Retail will continue being the king of Romanian Real Estate this year
* the article was first published on the 27th of March 2012
An interview published in Adevărul
This year, retail will continue being the only real estate sector that will be active and will bring new players on the market because of the projects that will be completed in the next 5 years, worth 2 billion euro, Ilias Papageorgiadis, CEO More Real Estate, stated in an interview for Adevarul.
“Retail will continue being the king of the Romanian real estate market this year. In my opinion retail is the only segment that enjoys interest from investors, in the true sense of the word. There are many companies that want to enter the market and are looking for the right time to do so. There are players that are already settled here. Retail is the only segment that is attracting investors because there are interesting projects. In the 2012-2016 period projects worth 2 billion euro will be delivered,” Ilias Papageorgiadis said.
The More Real Estate CEO believes that there have been many companies that were willing to come to Romania and, during this year, the level of interest will be higher than last year. “They want to know what the market is like. Companies are looking to open their own stores, to enter a mall or to find someone willing to buy their franchise”, Papageorgiadis added.
The More official believes that in the next few years Romania will increase the number of retailers present on the market by 5-7%. Regarding the type of commercial centers that is attracting investors, Ilias Papageorgiadis said that they are not looking for the most expensive project but the best thought-out one.
What projects do we have?
In the opinion of Ilias Papageorgiadis, at present, there are 2 types of malls in Romania, some that are part of the first generation of commercial centers, namely those that were built years back, and a 2nd type represented by constructions erected recently.
“The latest malls are closer to what Romanians want. They have managed to attract big names there and have set the bar higher in terms of competition and professionalism. It was a good thing for the old players on the market as well since it forced them to change something in order to stay in the game. People are looking for many options, good prices and options for the leisure sector, quality services, easy access and parking,” the More CEO explained.
For the projects of the first generation of malls, the approach was: “I let you get in. I let you give me your money.” We are now dealing with a completely different concept – “Thank you for coming, thank you for choosing my project”, and this also includes the office and residential segments, not only retail, Ilias Papageorgiadis believes.
“Half of the current projects in Bucharest fit in with Romanians’ expectations and the rest either have to change something or rent. There are cities in Romania where this percentage reaches 70-80%, depending on many factors. Constanta is better placed than Brasov, in this regard. In Brasov there is still room for improvement and people are able to buy retail projects there,” Papageorgiadis explained.
Where can malls still be constructed?
Regarding the number of malls that can still be developed, the More CEO said that Romania has cities that are covered but also areas where commercial centers can still be developed. Regarding the capital, it can still support some retail projects but it will be a big challenge for developers since there is already a huge competition on the market. “There isn’t room for everyone, there are uncovered areas and fields with growth potential, but you can’t build malls like in the past. You have to come up with something new. You need a good excuse in order for a client to come to you. But this will not be easy. I believe there is room for just 2-3 projects in Bucharest,” Ilias Papageorgiadis continued.
Timisoara has 2 projects, Cluj the same and here developments are questionable, Papageorgiadis believes.
Regarding the number of malls in Constanta, Papageorgiadis stated that at present there are 4 commercial centers that are opened and the competition is very high and will only intensify as in 2013 another mall will be delivered.
“Iasi can’t support any new commercial center developments since there are, already, 3 malls (Iulius Mall, Moldova Mall, Era Shopping Park) and another on the way (Palas Iasi) this year. The same can be said for Suceava, Oradea and Craiova that have a sufficient number of retail developments. Brasov, on the other hand, can support new commercial centers,” the More CEO explains.
If in the main Romanian cities there really isn’t much room for new commercial centers, than developers will focus on other types of developments, namely retail parks. At present in Romania there are over 10 retail parks and more will be constructed, Ilias Papageorgiadis believes.