ROMANIA

Romania is the second largest market in the Central & Eastern European (CEE) region after Poland,
accounting for an official population of 19.1 million. Over 55% of the population lives in urban area,
including 24 cities of above 100,000 inhabitants and Bucharest metropolitan area that reaches almost 2.5
million inhabitants. It is located at the intersection of Central and Southeastern Europe, on the lower
section of the River Danube and has a Black Sea coastline.

opment region

Area (km2)

Population (2011)[137]

Most populous urban center1

Northeast

36,850

3,148,578

Iai (400,323)

West

32,028

1,729,379

Timioara (367,347)

Northwest

34,159

2,495,247

Cluj-Napoca (392,562)

Center

34,082

2,251,268

Braov (402,041)

Southeast

35,762

2,399,602

Galai (608,904)

South

34,489

2,998,643

Ploieti (297,593)

Bucharest-Ilfov

1,811

2,042,226

Bucharest (2,678,392)

Southwest

29,212

1,977,993

Craiova (330,359)

Romania

238,391

19,043,767

Bucharest (2,678,392)

The retail market really started to develop from 2003-2006, following the growth in purchasing power and
EU accession. International anchor tenants from the food and fashion sectors which entered the market and
expanded rapidly, have now become established as market leaders. Interest is focused on cities with a
population above 200,000 inhabitants, which typically have a higher purchasing power than the national
average.
Development has focused on shopping centers located in cities of above 100,000 inhabitants. Shopping
centre provision at 119.3 sq m GLA/1,000 population (mid-2012), represents only 48% of EU-27 average
and suggests that there is potential for future development.
Romania's Gross Domestic Product at purchasing power parity (PPP) is predicted to stand at $16,982.323
per capita in 2015, when the country is expected to join[citation needed] the Euro zone. If this estimation proves
correct, Romania will surpass Turkey, Bulgaria and Venezuela in this aspect.[38]
Growing middle class
Romania has growing middle and upper classes with relatively high per capita incomes. World Bank
estimated that in 2002 99% of the urban and 94% of the rural population had access to electricity. In 2004,
91% of the urban and only 16% of the rural population had access to improved water supply and 94% of
the urban population had access to improved sanitation.[39] In 2007 there were about 19.5 million mobile
phone users in Romania[40][41] and about 7 million[42] internet users.
The net average monthly wage was 1,192 lei (roughly 380 USD) in March 2008,[43] rose to 1,352 lei (430
USD) in 2009[44] and is expected to reach 1,819 lei (570 USD) by 2013.[45] The income from salaries in
Romania had the highest growth rate in the region during 2006.[46] Despite recent growth Romania still has
the lowest net average monthly wage in the European Union.

ECONOMIC SUMMARY
ECONOMIC INDICATORS*

2009

2010

2011

2012F

2013F

GDP growth

-5.8

-1.9

2.1

1.1

2.4

Consumer spending

-10.3

-0.5

1.3

1.4

2.9

Industrial production

-6.3

5.6

6.0

2.9

4.4

Investment

-25.4

-4.5

4.4

3.9

5.7

Unemployment rate (%)

6.6

7.6

5.2

4.7

4.6

Inflation

5.6

6.1

5.8

3.0

3.7

RON/ (average)

4.24

4.21

4.24

4.41

4.52

RON/US$ (average)

3.05

3.18

3.05

3.48

3.53

Interest rates 3-month (%)

9.3

6.5

6.2

5.1

5.0

Interest rates 10-year (%)

9.7

7.3

7.2

6.4

6.2

ECONOMIC
BREAKDOWN
Population

21.4 million (2010)

GDP

US$188.1 billion (2011)

Public sector balance

-4.4% of GDP (2011)

Parliament

Government formed by PSD (Social Democrats), PNL (National Liberal Party)

and PC (Conservative Party).

President

Traian Basescu

ECONOMIC
BREAKDOWN
Prime Minister

Victor Ponta

Election dates

December 2012 (Parliamentary) 2014 (Presidential)

RETAIL SALES GROWTH:

% CHANGE ON PREVIOUS YEAR
Romania

2009

2010

2011

2012F

2013F

Retail Volume

-10.31%

-5.66%

-2.41%

7.17%

3.18%

Retail Value

-7.10%

1.88%

4.49%

9.72%

6.10%

MAJOR DOMESTIC FOOD RETAILERS

Regional chains of supermarkets such as Unicarm, Carmolimp, Angst, Succes etc.
MAJOR INTERNATIONAL FOOD RETAILERS
Kaufland, Carrefour, Real, Cora, Auchan, Metro Cash & Carry, Selgros Cash & Carry, Billa, Mega Image,
Profi, Lidl, Penny Market
MAJOR DOMESTIC non-FOOD RETAILERS
Dedeman, Leonardo, House of Art, Altex, Diverta, Domo, Flanco, Nissa
INTERNATIONAL RETAILERS in ROMANIA (a selection)
Inditex Group (Zara, Bershka, Pull & Bear, Stradivarius, Oysho, Zara Home, Massimo Dutti), H&M, C&A,
New Yorker, Takko, LC Waikiki, Intersport, Hervis, Decathlon, Nike, Deichmann, Humanic, Sephora,
Douglas, Ikea, Praktiker, OBI, bauMax, Bricostore
Food & Beverage Operators
McDonalds, KFC, Pizza Hut, Subway, Starbucks, Nord See, Paul Bakery, Pizza Dominium, Gloria Jeans
Coffee, Spring Time
Romania is one of the main potential markets in CEE region, accounting for a population of 21.4 million
inhabitants and a significant projected increase in purchasing power in the medium to long-term. There has
been a rapid development during the last 10 years as major international retailers have entered the market
and modern schemes were delivered.
The Romanian retail sector has much foreign investment, most notably in the food sector, which is now
dominated by foreign players such as Rewe, Lidl, Real, Carrefour, Cora, Profi, Auchan and the Delhaize
Group. The largest expansion plans at the moment are those of foreign supermarkets and discounters, such
as Carrefour and Mega Image, who are planning further expansion.

The existing stock of shopping centre space in Romania accounted for 2.55 million sq m GLA in mid 2012.
The current density of 119.3 sq m GLA/1,000 inhabitants continues to be smaller than in other CEE
counties such as Poland (219.2 sq m GLA/1,000 pop.), Czech Republic (200.6) and Hungary (132.2).
Bucharest recorded a density of 379 sq m GLA/1,000 inhabitants, while for the rest of the major cities the
average density varies in between 200-500 sq m GLA/1,000 inhabitants. After the start of the crisis, the
development program has become more focused on dominant schemes and convenience-type units
anchored by hypermarkets.
Retail warehousing is present in Romania though mainly as stand-alone boxes and units attached to onelevel shopping centres, rather than on true purpose-built retail parks. There are a significant number of
international retailers occupying retail warehouse units such as Praktiker, Hornbach and OBI, Bricostore,
BauMax, as well domestic operator Dedeman. Developers have preferred to focus on the shopping centre
market in order to maximize the return and benefit from the existing demand. The number of potential
tenants for retail parks remains limited.
There is just one outlet centre operational in Romania, located in the Western part of Bucharest. Fashion
House Outlet has 11,000 sq.m GLA, with another 9,500 sq.m available for future expansion. The further
development of the market is restricted by limited demand for outlet facilities and reduced motorway
infrastructure.
E-commerce is developing fast as a consequence of the large expansion of high-speed internet
infrastructure, aggressive discounts promoted by online retailers, diversified payment methods and
increasing number of retailers with on-line coverage. Internet sales record double-digit year-on-year
growth, their share in total retail sales increasing.
Most international retailers in Romania operate through franchises, although the number of international
players with a direct representation is an upward trend. International anchors established direct operation in
Romania, while franchises focused on small and medium space users.
There are no restrictions on foreign companies either buying or renting property in Romania. After the start
of the crisis, market conditions have witnessed significant changes in tenants favor as landlords became
more flexible in their approach to securing occupants. International anchors especially have benefited from
this new market status, implementing important expansion programs during the last years.
New entrants can now find a larger number of potential opportunities for expansion than before the start of
the economic crisis, although the dominant schemes with confirmed sales densities usually have low
vacancy rates (below 5%).
New Entrants to the Market
Clockhouse

Subway

CCC

Burberry

Leroy Merlin

KEY
FEATURES OF
LEASE
ITEM

COMMENT

Lease Terms

Traditionally, in Romania leases have been for a term of 5 - 10 years and could be higher
with 20 - 30 yrs often seen in parts of the retail market (eg for an anchor tenant).

KEY
FEATURES OF
LEASE
Leases are now more typically for 3-5 years. Break options were rare in the past but now
are case by case negotiable, mainly for the anchor tenants. In the absence of a clear
agreement in the lease, the tenant has no legal right to break so long as the landlord
fulfils his obligations. Where agreed, breaks are typically at the first rent review for retail
space.
Rental Payment

Rents are payable quarterly or monthly in advance, depending on the agreement.

Turnover/percentage rents are common seen in shopping centres and factory outlet. A
security deposit is normally required for tenants as bank letter of guarantee or bank
deposit in amount of 3 months of base rent + service charges + marketing fee + VAT. In
specific cases of international anchors with a strong covenant or where a parent company
guarantee (or less frequently a bank guarantee) is provided, it is not requested a security
deposit. Premium payments are not common place in the retail market .

Rent Review

Annual indexation to CPI. There is no standard review mechanism and this may be
negotiated in the lease. Reviews will typically be seen at the end of the initially agreed
term rather than during this period.

Service Charges, A service charge is usually payable in multi-tenanted buildings and covers management
Repairs and
fees, security, cleaning, landscaping, internal maintenance of common parts, external
Insurance
maintenance and insurance, servicing of elevators, water, heating, air conditioning,
management fees and property taxes. It excludes internal maintenance and insurance of
rented accommodation, utility charges and VAT. The landlord is responsible for
external/structural matters in shopping centers (charged back via service charge) or
tenant (except in multi-let buildings). The tenant is responsible for internal matters. The
landlord usually insures the main structure and external fabric but will charge this back
to the tenant. Insurance for common parts is also paid by the landlord and charged back.
The tenant usually pays for internal insurance directly.
Property Taxes
and other costs

The local government authority charge the rates, the local property tax for individual,
while for the companies is calculated as percentage from the book value (0.75 1.50 %).
Land taxes are based on sq m basis.

Disposal of a
Lease

Sub-letting is usually possible under the terms of the lease, subject to landlords
approval. Assignment rights are not normally barred in the lease but will also be subject
to consent which should not be unreasonably withheld. Early termination is only by
break clause to be negotiated at outset of lease by mutual consent upon negotiation. At
lease end, the tenant is responsible for re-instating the premises to the same condition as
at the start of the lease, subject to normal wear and tear. All tenant improvements must be
approved by the landlord subject to the alteration covenant in the lease and the fact that
approval should not be unreasonably withheld. Older leases may have Privity of Contract
whereby all former lessees can be held liable for any default by a later tenant under the
same lease

Valuation
Methods

Shops are valued on the derived methods of income approach such as: direct
capitalisation, discounted cash flow etc.

Legislation

Leases must be in writing and the lease document forms the standard documentation
required. A formal deed is required for all leases. A mandatory standard form of lease
does not exist although a market standard is in place