Jerome Peyrard, the development manager of the Cora hypermarkets for Romania and Hungary, says the network will not speed up its expansion due to the high land prices and to the volatility of the real estate market.
Cora, one of the first modern retail networks that entered the domestic market, plans to expand its network inside the cities and will open its third outlet in Bucharest in 2008. "If we had planned an annual expansion pace on the domestic market, we would have been constrained to forgo certain criteria when choosing a location, so as to be able to meet the construction deadlines. It could take us more than six months to decide to buy a plot from the moment we identify an interesting one, because we are extremely cautious on the real estate market," says Jerome Peyrard.
The French company will continue to expand in its own locations, though the new outlet that will be opened in 2008 will be located in a rented space in the Sun Plaza shopping centre in Bucharest (Berceni district).
"The fact that we chose a future location in the Sun Plaza shopping centre is an exception for us, as our expansion strategy demands that the outlets be placed in our own locations. In my opinion, Sun Plaza is the first genuine shopping centre that will be opened on the domestic market, because the presence of a hypermarket that serves as an anchor guarantees a significant weekly traffic," states Peyrard.
He says the domestic real estate market is very volatile, given the prices of land that have boomed over a very short period of time.
"The prices of 300-400 euros per square metre in the outskirts of the cities in the country are too high from our point of view. The prices for certain plots have seen a 10 and even a 15-fold rise over the past five years," he says.
The claims over land and the lack of professionalism are yet more obstacles the French retailer is facing on the local real estate market.
"There are many owners who want to make a lot of money in a very short time, and they are speculating with plots, although they are not specialists in this field. In a Romanian city we found out that the land the owner presented us in the papers was not the real one when we went to check it," adds Peyrard.
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