Banks have become more reluctant to grant financing for shopping centre projects amid turmoil on the US subprime market, which is having an indirect effect on domestic developers.
"Companies without at least 40% of retail space, which is under development, pre-rented will find it difficult to get financing from banks," believes Michael Israeli, managing director and shareholder in Atrium Centers, which is in the process of building 4 shopping centres in Romania, in partnership with British fund Dawnay Day.
Around 30% of the company's most advanced projects (located in Arad and Cluj-Napoca) are already rented, while for the projects in Baia Mare and Satu Mare contracting started in October.
Real estate consultancy DTZ Echinox handles the renting of the space in Arad and Satu Mare, while Cushman & Wakefield deals with the shopping centres in Cluj and Baia Mare.
There is tough competition in the cities where Atrium operates, with at least 3 mall projects planned in each of them.
"In Cluj-Napoca, competition is apparent, and the main rival is Iulius Mall, which has a project in the city. In Arad, there is potential competition, although there are no completed projects yet. Nevertheless, the strongest competition is likely to come from the mall developed by Africa Israel," says Michael Israeli, who also believes in Baia Mare their main rival will be RED shopping centre project, as both will be anchored to hypermarkets. "In Satu Mare, as far as I know, no other project has been announced".
Company representatives say the 4 malls will not be the only ones in the company's portfolio, because the company plans to expand its activities in the central and north-eastern parts of the country.
"We are very selective when choosing cities for expansion. We won't buy any plot of land just to be present in that city," says the manager.
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