As long as real estate consultancy firms are budgeting fallingrevenues for 2010 as well, the real estate market is sure to haveanother tough year. Consulting firms' business has been a barometerof real estate development in recent years, and the investmentslump of 2009 was immediately felt by consultants.
"Real estate agents had inflated things for years," says RazvanGheorghe, manager of Cushman & Wakefield real estateconsultancy firm, referring to the over-assessment of some areas,land plots or real estate projects, which are either in clinicaldeath, or frozen at the design level.
The statement seems a little shocking coming from the consultantboasting the most extensive experience on the market of retailspace, but it is true, considering that feasibility studies werecarried out for each of the 100 shopping centre projects and fewwere the ones that were not considered sustainable.
Now, the situation on the market has changed and even DambovitaCenter project seems crazy, not just given the impact it may haveover downtown Bucharest, but also the fact that AFI PalaceCotroceni is now located less than two kilometres from it.
"There will be a problem with shopping centres". The consultant istrying to determine where the firm's fees may come from next year.As most rental contracts for AFI Palace Cotroceni have beenconcluded, Gheorghe is aware that next year is set to be acomplicated year, with few openings and rivals that arewell-anchored on the market.
"This year, the turnover decrease comes from the segment ofshopping centres. In the summer of 2008 we had 20 viable contractson this segment, but most of them have been delayed or frozen."(...) We may top the initial budget for this year, but we'll havea decline of at least 20% from 2008," Gheorghe says.
Cushman was one of the firms that posted a turnover increase in2008 inclusively, while Colliers International or Jones LangLaSalle were quicker to feel the crisis fallout.
"For next year, we'll probably budget a 10% drop from 2008. Therewill be high uncertainty regarding rental deals as there will befew newly built products," considers Gheorghe.
One of the departments where Cushman saw a positive developmentthis year was the street-front retail team.
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