2023 was one of the most dynamic years of the last decade in terms of new modern retail projects in Romania, adding around 220,000 sqm to the total retail surface, more than double compared to the past couple of years, according to the annual report by Colliers. Meanwhile, 2024 signals increased interest in large mixed-use developments.

Romania currently has a total modern retail stock of over 4.3 million sqm, of which over 2.7 million sqm in shopping centers and the rest mainly in retail parks. Over 60% of the total modern retail area is concentrated in the top 10 largest cities, with over 200,000 inhabitants.

The most significant addition in 2023 was NEPI Rockcastle’s mall Promenada Craiova (63,700 sqm), which is also the biggest retail scheme delivered in Romania since 2016’s ParkLake in Bucharest. Next come AFI Europe’s AFI Arad retail park (29,400 sqm) and Prime Kapital/MAS REI’s Carolina Mall in Alba Iulia (28,900 sqm).

Overall, the distribution looks much more balanced than in the recent past, Colliers said, with new projects targeting both bigger cities and smaller towns.

Colliers consultants mentioned that they only took into account shopping schemes above a GLA of 5,000 square meters.

“Starting with the first half of last year, real wage growth, meaning the difference between annual wage and price increases, has returned to positive territory. By the end of 2023, real wage growth of around 9% was already comparable to pre-pandemic levels, which had a positive impact on market and consumer confidence and, thus, on retailers’ performance and demand in the retail market. Early indicators of November and December show quite robust results, and given how relevant these months tend to be for retailers, it is safe to assume that 2023 was another good year for both retailers and owners,” said Liana Dumitru, Director of Retail Agency at Colliers.

“While the cost of risk is more significant than in other countries, and this can impact the bottom line when taking out a loan, for example, we view this as a sign of a still undersupplied market in terms of retail schemes and a market which can accommodate new players,” she added.

However, Colliers consultants note that while the overall feeling is good among various market participants, from customers and retailers to landlords, consumers seem to have become more cautious, as it usually happens at times of heightened uncertainties. Thus, after years of solid price increases, the discounter segment of the market has continued to perform well in 2023, and it is expected to experience favorable dynamics further on.

Otherwise, Colliers also said, the high returns that the local market offers to the retailers, plus the rapid recovery in retail sales, one of the fastest in the EU, has put Romania back on the retail map. Last year saw new brands making their way to Romania, such as Lefties, Jimmy Kay, Wittchen, or Stefanel.

“Looking forward, with less than 90,000 sqm of new modern retail schemes due to be delivered this year, and more than half coming from a single scheme - Arges Mall in Pitesti, it is quite the downgrade from last year and rather comparable to the softer years immediately following the start of the pandemic,” reads the press release. 

But things are expected to change, as a few large and dominant shopping centers are expected to add several hundred thousand GLA to the local retail stock in 2025-2028.

Iulius Group’s Cluj-Napoca mall initially promised a GLA of over 100,000 sqm, with a fresh scheme in the same town from the Prime Kapital/MAS REI joint venture to deliver over 70,000 sqm of leasable retail area. In Iasi, the Prime Kapital/MAS REI will also deliver an extension of nearly 60,000 sqm to Moldova Mall by the end of 2025.

“Romania remains a significantly undersupplied market, not only in comparison with Western European countries but also with Central and Eastern European countries. For a similar level of consumption (in terms of volume) as in the Czech Republic and Poland, Romania’s modern retail stock per capita is twice as low as in the Czech Republic and more than 40% lower than in Poland,” Colliers noted.

Liana Dumitru commented: “Overall, despite the slowdown in new deliveries in 2024 relative to 2023, the medium-term pipeline is not at all a poor one, quite the contrary. In fact, while in previous years, the retail parks dominated, many of them targeting small and medium-sized cities, we are now seeing developers’ appetite return to larger retail projects, which tend to carry a bigger investment footprint. […] Otherwise, the shift in mindset towards bigger projects shows an increased risk appetite and confidence in the country’s longer-term path. There is still room for such sizable shopping in many big cities, including Bucharest, where the problem has been more one of securing adequate land plots with good infrastructure connectivity.”

irina.marica@romania-insider.com

(Photo source: LinkedIn/Prime Kapital Development)