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Retail Market Strategies 2009 Bucharest, 26 May 2009. Contents. Romania Economic Performance 2009 - sld. 3,4 Retail Market 2008 – sld.5 Bucharest – Retail Market May 2009 – sld. 6 Retail Market Directions- 7,8 Evolution of Modern Shopping Centres Stock – sld. 9

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RetailMarket Strategies 2009Bucharest, 26 May 2009

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  • Romania Economic Performance 2009 - sld. 3,4

  • Retail Market 2008 – sld.5

  • Bucharest – Retail Market May 2009 – sld. 6

  • Retail Market Directions- 7,8

  • Evolution of Modern Shopping Centres Stock – sld. 9

  • Top 5 Shopping Centre Stock Delivered in 2008 in Europe – sld. 10

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Romania Economic Performance 2009

  • Despite a strong first 9 months of 2008, where GDP growth was 8.9% and foreign direct investments equalled 9 billion Euros, the final few months showed a rapid slow down in economic activity. The international crisis has since begun to have a serious effect on the Romanian economy.

  • As seen globally, there is uncertainty with regard to the economic evolution during 2009; how hard the local economy will suffer and when the conditions will improve are as yet unknown

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Retail Market 2008

  • 2008 was a record-high year for shopping centre development; over 721,000 sq m GLA was delivered onto the market, including 25 new projects and 12 existing scheme extensions.

  • Retail warehouses are still dominated by stand-alone units or units attached to shopping centre projects, few retail parks are operational. The first factory outlet centre in Romania, Fashion House developed by Liebrecht & Woods, was opened in December 2008 located in the Western part of Bucharest.

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BUCHAREST – Retail Market May 2009

  • Bucharest accounts for over 30% of the total retail turnover in Romania.

  • The existing shopping centre density = 277 sq m GLA/1,000 inhabitants, significant below the levels registered in others CEE Capitals, 400-600 sq m/1,000 people.

  • Main shopping centers are Baneasa Shopping City, Plaza Romania, Bucuresti Mall, Unirea SC and Militari Shopping Center.

  • High streets retail is concentrated in downtown Bucharest, along the major boulevards of Magheru / Balcescu and Calea Victoriei.

  • Existing hypermarkets: Carrefour, Cora, Real, Auchan and Kaufland.

  • Existing cash & carry: Metro and Selgros.

  • Existing DIY: Bricostore, Praktiker, OBI, Hornbach, Mr.Bricolage and Dedeman.

  • International fashion retailers: Zara, Marks & Spencer, Promod, Mango, Intersport, Nike, Debenhams, Esprit, Next, Peek & Cloppenburg, Reserved, Cortefield etc.

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  • SUPPLY: Shopping centre stock under construction with announced delivery in 2009 is 32% lower than in 2008, but still accounts for a substantial 490,000 sq m of GLA

  • DEMAND: Stable demand from major international anchors, however, this is accompanied with a decreasing interest for expansion from under 500 sq m retailers whom have been affected by the drop in sales and the lack of finance

  • RENTS: Decreasing average levels for schemes outside Bucharest and peripheral locations

  • VACANCY: Increasing vacancy rate especially for decentralised locations and cities with a population of less than 200,000.

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  • Despite a slowdown in November and December, total retail sales in 2008 registered a healthy year-on-year growth of 13%, with a higher result for the non-food sector (+14.4%), according to the Romanian Statistical Office.

  • Retail development was dramatically hit in the last four months of 2008, a large number of projects have been postponed for an undefined period of time or cancelled.

  • All types of developers have been affected by the worsening market conditions including a total lack of financing from banks, decreasing property value and an absence of possible investors for joint-ventures. There were no new projects started, while some of the schemes under construction that had not already secured financing were stopped.