Romania’s retail segment makes quick recovery from coronacrisis

Romania’s retail segment makes quick recovery from coronacrisis
By Iulian Ernst in Bucharest August 12, 2020

The first half of the year was the most difficult for Romania's retail sector, given the deadlock during the state of emergency, but the recovery in recent months was stronger than expected by most players in the market, according to the report issued by the real estate consultancy firm Colliers International for the first half of 2020.

Foot traffic has gradually returned to towards 80% of normal levels for this period of the year after the reopening of malls in June, based on information that Colliers International consultants received from major landlords.

In some retail parks, particularly in certain parts of the country, sales are already above 2019 levels. Google mobility indicators for Bucharest show that foot traffic in all retail and entertainment areas is 25% below a baseline set using figures for the early January-early February period, which tends to be much busier than summer months. However, sales are half compared to last year's levels in some segments such as restaurants and coffee shops and fashion as of mid-2020, so spending intentions have not fully recovered.

"The V-shaped recovery of consumption continued strongly in June, with retail sales having recovered three quarters of the decline seen in March and April and overall sales turning positive for the year in the January-June period. While the future path of the recovery will depend on how the pandemic situation evolves, as well as the dynamic of the labor market, it is clear that things are moving much faster than with the previous recession: retail sales do not return, in real terms, to levels seen in 2008's summer until mid-2015," according to Colliers.

A single retail park, in Miercurea Ciuc, with a bit under 12,000 sqm, was inaugurated in the first half of the year. While several retail projects were delayed amid the coronavirus lockdown, others moved forward, like NEPI's Shopping City Targu Mures (nearly 40,000 sqm), completed in July, and AFI Brașov (45,000 sqm) and Prime Kapital's Dambovita Mall (33,000 sqm) are set to open with little delay in the autumn.

Overall, the 200,000 sqm pipeline for 2020 is not too different from what Colliers consultants estimated before the COVID-19 pandemic (about 246,000 sqm).