BUSINESS

King Sturge: Trophy rents slow down retailers’ European expansion

Romania’s retail sales will grow by more than 60 per cent over the next decade, although still in recession in 2010, with larger markets such as Poland, Czech Republic and Hungary all poised for growth of more than 40 per cent, said Carmen Ravon, Senior Negotiator at property consultancy company King Sturge Romania.
“Romania’s modern retail scheme pipeline is now more realistic largely down to scarcity of funding and where available strict criteria are attached (catchments areas, spending power and competition). We also noticed another encouraging fact that confirms the increase of confidence in local retail market. The expansion and decision process of international retailers is quicker and we don’t include here only food retailers” explained Ravon. The new King Sturge report, “European Retail Property 2011 – bumpy landings”, states that retail markets as a whole have rallied over the last year but a bumpy rather than smooth landing is on the cards. In those European countries where rents are indexed to inflation, the Con­sumer Price Index is forecast to be highest this year in Romania (+6.3%), Hungary (+4.9%) and Greece (+4.3%), with the latter likely to be worst affected given that retail rents tend to be reviewed an­nually and indexed to the local CPI plus one point. In Hungary and Romania, as in many Central and Eastern European (CEE) countries, rents are more likely to be peg­ged to Euro CPI, mitigating slightly against higher inflation locally.

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