Crisis tames shopping mall rentals

The world financial crisis will affect the developers in Romania of shopping centres in the time immediately ahead, as a result of a liquidity crunch and prudence on the part of large companies about investing in risky markets.
Head of Cushman&Wakefield Activ Evaluation Department Dan Ionascu told daily Business Standard that the property projects already unveiled would be 20-30% delayed by the world financial crisis.
The Cushman official says the delays can mean one of two years, and the main reason is that both property investors and Romanian banks borrow from foreign banks. “When there is a threat to them, they redirect funds toward acquiring its own shares and thus protect themselves against hostile takeovers. Consequently, they will no longer provide funds to third parties,” Ionascu said.
Another impact on the ongoing property projects will be their modification in terms of architecture and indoor planning, which will be adjusted to limited budgets as a result of increasingly harder access to bank funding.
The Romanian market for shopping malls started off in 1999, when Turkish Anchor Group opened Bucuresti Mall, the first mall in Romania. The development continued with the opening of the Plaza Romania and the City Mall. Ever since, shop developers have continued to enter the Romanian market, bringing the number of developments unveiled by 2010 to more that 140 malls for rent, 20 of which in Bucharest alone.
Development Director with Mivan Development Marius Barbu says there are four factors at play in the market that will influence it: consumers will become more careful about shopping, retailers will be more careful with their expansion policies and banks and developers will be intrinsically tied to financing schemes that have become hard to get over the past months of the financial crisis.
Barbu says the number of projects unveiled to be carried out by 2010 could halve because of funding problems.
Market players say the rent for premium shopping centres will keep at the current level, or even go slightly up on a deficit of modern retail trade spaces. On the other hand, rent is expected to go down for second-class shopping centres, retail parks outside cities or those in less sought-after locations.
In 2007, average rent for shopping centres in Bucharest City stood at between 24 and 27 euros/square metre/month, down 4% form 2006.
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