Israeli real estate firm Hagag Development Europe has signed a lease agreement for the full commercial space in its flagship luxury development, The Palace, in central Bucharest.
The deal, finalized with a leading international luxury brand operator, will transform the site into a high-end shopping destination featuring brands such as Dior, Dolce & Gabbana, Valentino, Celine and Jimmy Choo, among others.
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The Palace luxury development in central Bucharest, Romania
(Illustration: Hagag Development Europe)
Located on Calea Victoriei, the city’s main upscale boulevard known for its historic landmarks and cultural sites, the retail complex will span approximately 4,550 square meters (nearly 50,000 square feet), including commercial spaces, terraces and storage areas.
The luxury retail center is set to open in the coming months, with average lease payments over the agreement’s duration estimated at €285,000 per month, plus VAT, indexed to European inflation rates.
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According to the company’s stock exchange filing, an independent valuation suggests that the deal will lead to an €8–10 million positive revaluation of the asset, which will be reflected partly in Hagag Development Europe's 2024 financial reports and partly in the first quarter of 2025.
The Palace complex has historical significance, having served the Romanian government in the early 20th century and been used by both the royal family and Nicolae Ceaușescu’s regime. Damaged in World War II, the site was later restored and designated a historical monument in 2004.
In addition to the luxury retail space, Hagag Development Europe is advancing plans for a mixed-use development adjacent to The Palace. The project is expected to include approximately 22,000 square meters of office or residential space, 7,000 square meters of additional retail and 21,000 square meters of underground parking.
“The signing of this agreement marks a major milestone for The Palace project and underscores the asset’s high appeal in the European real estate market,” said Shahar Mahat, CEO of Hagag Development Europe. “We are excited to welcome a leading luxury retail tenant, which will enhance both the commercial and future residential value of the development.”
Hagag Development Europe is owned by Israeli entrepreneurs Zahi Hagag (53%) and Shahar Mahat (21.5%).