Real estate investments in Romania reach EUR 410 million in H1 2019, expected to surpass EUR 1 bn by end-year

Anca Alexe 13/08/2019 | 13:29

The investment volume in H1 2019 amounted to almost EUR 410 million, a 6 percent increase compared to the similar period of last year, when the figure for investment transactions was EUR 386 million, according to Cushman & Wakefield Echinox calculations.

At the Central and Eastern European (CEE) level, which includes Poland, the Czech Republic, Slovakia, Hungary, Romania and Bulgaria, the Romanian market attracted around 10 percent of the total investment volume of EUR 4.1 billion.

The Czech Republic ranked first with EUR 1.9 billion, (a share of 45 percent), surpassing Poland, the country where an investment volume of about EUR 1.3 billion (31 percent) was recorded. Romania ranked third, surpassing Hungary (7 percent), Slovakia (5 percent) and Bulgaria (2 percent).

At the local level, the office sector was again the most active, with a share of 53 percent of the total volume, followed by retail (28 percent), while the industrial and logistics sector had a share of 18 percent. As for geographical distribution, Bucharest attracted 40 percent of the total real estate investments in Romania, followed by Cluj-Napoca with 32 percent, while the rest of the transactions were concluded in several other cities.

“Regarding H1 activity, we think that an important factor that negatively influenced the investment volume was the banks’ reluctance to finance such acquisitions due to the uncertainties caused by the fiscal measures announced by the government at the end of last year. Subsequently, the government re-assessed and revised those measures, so that the impact on the banking system was much lower than initially estimated, which unlocked corporate lending and which will therefore accelerate the closing of transactions in the second part of the year. Therefore, we anticipate that this year’s investment volume will substantially exceed the 1 billion euros threshold,” said Tim Wilkinson, Partner, Capital Markets, Cushman & Wakefield Echinox.

The largest transaction in terms of value took place outside Bucharest for the first time: Dedeman purchased The Office project in Cluj-Napoca, with a total rentable area of ​​63,000 sqm, for EUR 130 million from NEPI Rockcastle and Mulberry Development. This transaction marks the consolidation of Dedeman’s portfolio, which is becoming an increasingly important player on the local office market.

Dedeman had also marked the biggest transaction on the Romanian real estate market in 2018, by acquiring The Bridge in Bucharest.

Another important transaction involved Oregon Park C in the Floreasca-Barbu Vacarescu area, the last building of the Oregon Park project, which was sold by Portland Trust to Lion’s Head Investments for an estimated EUR 60 million.

In the industrial segment, the most relevant transaction was the acquisition of the A1 Logistic Park project located at km 13 of the A1 motorway by CTP, the largest owner of industrial spaces, for approximately EUR 40 million.

“We are witnessing increased competition between a significant number of investors, especially in regards to premium real estate assets. Those investors are currently paying more attention to completing the transactions in which they are involved, an aspect that will result in a yield compression over the short and medium terms. At the same time, we believe that besides the office and industrial transactions, we will see increased activity in the hospitality segment,” added Tim Wilkinson.

 

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