Liviu Tudor outlines two current areas of focus for retail developments in the CEE-country: the construction of retail parks in small cities and the extension of existing commercial areas in larger cities.
ACROSS: Which key sectors of the Romanian market do you expect to generate the highest growth within the next years?
LIVIU TUDOR: When we look at the Romanian commercial property market over the past years, we can see notable growth in the office, industrial and residential segments. Driven by the promising market situation and increasing demand, developers have ramped up business in all sectors.
In 2018 and onward, the industrial sector will continue the positive trend with new projects and expansions of the existing space dominated by logistics companies and retailers.
Also, the office market is maintaining its growth trend which is nonetheless expected to decrease in the following years.
As in previous years, the main demand drivers are the IT&C industry, the energy, manufacturing and automotive sector, followed by FMCG and services. Bucharest is the dominant location for commercial real estate investment, offering good infrastructure facilities and an established business environment that keeps investor’s and tenant’s focus.
ACROSS: Regarding the retail real estate sector, can you point out some of the main challenges and opportunities of the Romanian retail real estate market?
TUDOR: We can outline two key areas for retail developments: the construction of retail parks in small cities and the extension of existing commercial areas in larger cities. While the rise of e-commerce may affect the need for retail space, Romania continues to be highly competitive in the region.
Investors’ interest in retail real estate in Romania has increased in the past years as the positive economic conditions, beneficial capital flows, good macro performance increased market liquidity and generated great financing opportunities. All of that creates an suitable environment for investment and development. With high consumption, the retail segment will continue to attract investments.
The Romanian Association of Building Owners (RABO) is promoting this effort by working in close collaboration with industry leaders and EU organizations to ensure a harmonized framework for property investments, urban rehabilitation, new developments, real estate financing, energy efficiency, social inclusion, and environmental protection. As a member of the European Property Federation (EPF), RABO’s goal is to represent real estate owners, investors, and developers while taking advantage of great resources and know-how from property markets across the EU.
ACROSS: For how long do you expect the ongoing trend for construction and investment in the retail real estate sector to continue?
TUDOR: In Romania, shopping centers are fast-growing and highly popular destinations for shopping. Given the economic growth and market potential, retailers are given a powerful incentive to expand to Romania. We expect new brands to enter the market and existing brands to focus on consolidating their market position or increasing their presence.
The stable growth trend, which started in Romania in 2015, will most likely continue in 2018 and 2019 unless extraordinary circumstances occur. We expect new investors and investment opportunities to arise all across office, industrial, and retail segments.
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