Domestic consumption in Romania could increase by up to 11 percent this year, on higher population revenues, growing retail financing and a decrease in food prices, according to Robert Maxim, managing partner of Ensight Management Consulting.

“People will spend a bit more money on food due to lower prices, but we also see an increase in demand for non-food products and services, which is good news for shopping centers”, Maxim said during the conference “The Future of Shopping Centers in Romania”, which was organized by real estate consultancy firm Immpuls.

In the first quarter of 2014, the retail trade turnover was up 9.3 percent, INS data shows. Sales of non-food products grew the most, by 13.1 percent, followed by fuel sales (+7.1 percent) and food (+6.1 percent).|

According to Ensight forecasts, retailers within existing shopping centers on the Romanian market should see a 3.5 percent medium increase in revenues, due to the higher consumption, but this will not be distributed equally.

Robert Maxim sees higher revenue growth for large general retailers such as hypermarkets and supermarkets, but because of the traffic increase for these retailers he expects a spillover effect for the shopping centers that have such hypermarkets or supermarkets as anchors. He also expects better performance for shopping centers in Bucharest and larger cities, while those in smaller cities will continue to struggle.

While the economic environment is positive, Maxim sees some political instability due to elections and he points out that no major investment is done in such years. “The level of the debate in the electoral campaign is very low and this is not encouraging for investors.”

As for the unrest at Romania’s eastern border due to the conflict between Russia and Ukraine, Maxim says this affects the way Romania is perceived by international investors from New York and London who take the CEE region as a whole. He states that this situation has also a positive side for Romania, which, as a NATO member looks safer than Ukraine and Russia.

Andrei Chirileasa, andrei@romania-insider.com

(photo by Andrei Chirileasa, for Romania-Insider.com)