Consultancy firms' budgets reveal expectations of a difficult 2010

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