Iulius Group shrinks residential in Palas Iasi, expects EUR 10 mln rental revenues from retail and office

Palas Iasi, the mixed real estate project developed by local developer Iulius Group in partnership with the Iasi municipality, has had to shift the project amidst the crisis to comply with the new market realities. The project, which was initially supposed to feature 800 apartments, will only feature 100 apartments, out of which 60 have already been sold, said Iulian Dascalu, president and owner of the group. “We will focus on retail, offices and services through the hotel components,” said Dascalu (in picture). The EUR 260 million project, financed through bank loans, should be finalized in September next year. The office segment of the project, some 20,000 sqm in total, will be opened in the following period. The first office building was already finalized and is fully occupied. For the rest of the office and retail areas, Dascalu expects an occupancy rate of 95 percent in September 2011, when the project is set to be finalized. The retail area of the project, which includes a mall and a shopping street, will be 60 percent leased by the end of this year, the developer expects. The entire retail area will cover more than 50,000 sqm. So far it has leased 5,000 sqm to French retailer Auchan, which will open a unit there next year. This will be the smallest Auchan unit in Romania so far and a step towards a new store format, according to Patrick Espasa, general manager of Auchan Romania. The other seven Auchan units in Romania cover between 8,500 and 16,000 sqm. The Auchan unit in Iasi will focus on grocery products, with 80 percent of its offer being made of food products. Palas Group, which owns shopping centers in Suceava, Iasi, Timisoara and Cluj – Napoca, expects to cash in EUR 8 million in rents from the retail area in Palas Iasi in the first year of activity, while the office buildings should bring EUR 2 million in rental income, according to Iulian Dascalu. Palas Iasi will feature 320,000 sqm of total built area, which will include a shopping mall, a retail street, office buildings, a housing area, a four-star hotel and a Small Luxury Hotel, a SPA center, 2,500 underground parking places, a park, entertainment and cultural areas downtown Iasi. The four-star hotel will be built by another company and the developer is currently negotiating with a hotel operator already on the Romanian market. The project is being built in an area with historical buildings and the investments in consolidating the versant near the project and in capturing the underground water which was affecting the buildings in the area was of EUR 6 million, according to Dascalu. Corina Saceanu (corina@romania-insider.com) (Photo source: Agerpres)