Investors have been building a land inventory for new projects in the past two years in Bucharest, but deal-making activity is set to remain strong throughout 2019 as there are still land plots available that are suitable for various projects.
The biggest land deals in the Romanian capital totaled EUR 280 million last year, a record value for the past decade. In 2017, deals stood at EUR 250 million, according to data by consultancy Crosspoint Real Estate.
“In our opinion, 2019 will bring a slight increase in the volume of transactions compared to 2018 in terms of the land market, with growth sustained by some large transactions that are in advanced stages of negotiation at this time,” says Ionut Stan, associate director for land development at Crosspoint Real Estate. He adds that office and residential developers in Bucharest are looking for well-connected land plots near metro stations as well as land with an approved urban zoning plan (PUZ).
The Expozitiei area has recorded an increased number of land transactions as developers want to build apartments and offices. The location is becoming one of the most dynamic property investment pillars in Bucharest, with developers placing their projects close to the planned subway station that will link the city to the Henri Coanda Airport.
MORE DEALS IN REGIONAL CITIES
Over the medium term, land market volumes are set to fall compared to the post-crisis highs recorded in 2017 and 2018, according to a baseline scenario by real estate consultancy Colliers International Romania. “We would also expect to see more major deals in regional cities over the next couple of years, though some large deals in the capital which might close in 2019 could keep the balance skewed in favor of Bucharest for the time being,” says Silviu Pop, head of research at Colliers International Romania.
Cluj-Napoca, Timisoara and Iasi are also seeing more land deals as developers are expanding in the residential and office areas. These are some of the regional cities that are core markets for industrial and logistics parks as well, while retail players have also invested significant sums in large scale projects. “We are seeing higher demand for secondary cities compared to the past years,” says Ioan Nastase, consultant in the development & land department at real estate consultancy firm JLL Romania.
“For 2019 we expect an increase in the volume of land transactions, but the total value of transactions will most likely not exceed that of last year. This evolution can be explained by the lower availability of land in the center of the city, where the prices are higher. In these conditions, we will see transactions with bigger land plots on the outskirts of the city, but at a lower value,” says Nastase.