Euromall does not rely on rents alone

Part of the retailers of Euromall shopping centres will give between 7% and 10% of generated revenues to the owners, while the rest of companies will pay a rent per square metre, the most widespread alternative on the domestic market, says Moshe Turgeman, general manager of firms developing the Euromall projects.
He says that given the current state of the domestic real estate market, it is risky for a developer to start a project at a return of below 15% per year.
“Construction material costs are rising and the market is experiencing a shortage of construction workers, which is driving costs up,” says Turgeman.
Thus, at a 15% yearly yield, revenues from operating the Euromall shopping centre could reach 33 million euros, after finalisation, given the cumulated value of investments of 220 million euros.
According to market information, real estate developers took into account returns of around 12%.
Four shopping centres will be developed under Euromall brand in Pitesti, Galati, Ploiesti and Craiova. The first will be delivered in Pitesti early this May, and will include over 20,000 square metres of retail space.
The main investor in Euromall projects is Bernard Braka, a shareholder in Gigastore company operating a network of 27 shopping centres in France.
The company’s second project will be finalised in Galati, where the company is working with Colliers real estate consultancy for the rental of commercial space. Investments in this project will revolve around 45 million euros, with works due to be finalised in the second half of next year.
The company also started eyeing other segments of the real estate market as a significant number of projects have been announced on the market of shopping centres, making this type of developments a risky investment. It paid almost 30 million euros for a 7-hectare plot of land close to Baneasa airport, on which it plans to build around 1,000 luxury apartments.
Referring to commercial projects, Euromall representative said he received offers from English and Austrian funds, as well as from Dutch and Scottish investors, but the owners do not intend to sell in the near future. The 4 shopping centres to be raised under Euromall brand will fill a total built area of over 180,000 square metres.