The real estate retail market in Romania has seen limited deliveries in the first half of 2023, but the second half of the year is expected to be very active, with approximately 260,000 square meters announced for delivery by the end of the year, most of which are in small and medium-sized cities, according to the market report by Colliers on the real estate market's performance in the first six months of 2023.

Analyzing consumption patterns, after years of high inflation, consumers are starting to become more cautious and are leaning towards purchases with a good price-quality ratio. Colliers consultants believe that this won't necessarily reduce the volume of products purchased, but consumers will shift towards lower prices.

New projects are well-received by the market, and there is strong interest from tenants to open stores. Even in older dominant projects in major cities, retailer interest is high, especially for those with smaller store concepts or premium brands, and each such center already has a waiting list.

As a result, the vacancy rate is relatively low or practically nonexistent in stabilized and dominant projects. Regarding rents, although landlords expect an increase in base rents to cover higher development costs, retailers are cautious in negotiations, considering that indexing and increasing common area charges are already putting pressure on their profitability.

The cost of services for common areas is a sensitive point of discussion because, in some cases, they have almost doubled. For example, in retail parks, we see increases from 1.5-2 euros/sqm to over 2.5-3 euros/sqm.

Referring to official statistics recently published for 2022, Colliers consultants highlight that, overall, it was a good year for discounters and retailers selling affordable products.

As for overall consumption, there are some signs of slowing growth. Non-food product sales, for example, increased by about 4% in the first half of 2023. However, much of this growth is due to favorable base effects, and in fact, if we look at the post-pandemic period, the first half of 2023 is equal to less than a tenth of the growth recorded in 2019.

Furthermore, as real wage growth accelerates and corporate hiring intentions remain firm, Colliers consultants believe that consumption trends should generally remain favorable.

After years of high inflation, it is expected that consumers will become more cautious and wait a bit for prices to stabilize before returning to their old shopping habits.

In perspective, most of the new projects expected in the next period will be in cities where there are no other retail centers or in the new suburbs of major cities, in areas with a high population or high purchasing power.

Omnichannel sales will either strengthen or erode a retailer's position in the coming years, as the combination of offline and online offers the possibility to integrate consumers' personal preferences and offer them more flexibility.

A generational shift could also influence several aspects: Generation Z, raised in the digital world and with a more conscious attitude towards consumption and the environment, and with a more careful spending habit, will have an increasingly significant impact.

Additionally, we expect wages in Romania to continue their upward trend at a faster pace than the EU average over the next decade, likely leading to increased consumption and a greater preference for luxury goods, which could approach 90% of the EU average, up from under 80% currently.