Sorin Preda, Global Vision: Romania, a key gateway for companies seeking to establish a presence in EMEA

In the European landscape, Romania continues to be a key gateway for companies seeking to establish a presence in the EMEA markets. Foreign companies are capitalizing on this and expanding their operations to provide effective solutions and availability at a much lower cost. Constanța Business Park is the perfect example of Romania’s allure for investors, especially in the realms of re-shoring, near-shoring, and friend-shoring.

The already announced infrastructure modernization plan further enhances the demand and plays a vital role in attracting new capital investments, particularly within the industrial and logistics sector. However, the current outdated infrastructure acts as a hurdle, impacting the smooth flow of goods and services. Ports and terminals lack the necessary technological advancements for efficient cargo handling, leading to delays and inefficiencies across the entire supply chain. Opportunities for the logistics sector will still include e-commerce growth. The increasing demand for fast, reliable delivery services has created opportunities for companies to innovate and expand their operations. Last-mile delivery remains a focus for innovation, with opportunities to improve efficiency, reduce costs, and enhance customer satisfaction through technology and alternative delivery methods. Global trade expansion continues to evolve, logistics companies can benefit from expanding into new markets and providing cross-border logistics solutions.

Even this early in 2024, we can already see challenges related to supply chain. The geopolitical instability is already adding new factors of stress. The situation in the Red Sea, where terrorists recently attacked commercial ships is one example, therefore the routes of maritime transport suffered, both costs and transit times have increased because now the ships have been rerouted through the Cape of Good Hope and thus bypass all of Africa and come to Constanta through Northern Europe. Because of this aspect, the current transit time for maritime transport from China to Romania is estimated at 50 calendar days port to port.

With increased focus on sustainability and environmental responsibility, logistics companies are under pressure to reduce their carbon footprint and adopt greener practices. This may involve investing in alternative fuels, electric vehicles, and optimizing transportation routes. Changes in trade policies, customs regulations, and international agreements can also have a high impact in the logistics sector. Companies need to stay abreast of evolving regulations and compliance requirements, which can be complex and vary by region.

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Even though Romania remains a highly appealing market within the EU, providing advantageous returns on invested capital, investors are now approaching new developments with heightened scrutiny, placing greater emphasis on understanding the implications of these advancements. Regarding the rising costs associated with capital, construction, and operations—encompassing human resources, transportation, and IT—investors remain cautious, uncertain whether the rise in expenses can be offset by corresponding increases in revenue.

Moreover, it is essential for us to maintain a vigilant oversight and remain agile in adapting to the changes anticipated with the forthcoming elections in over 60 countries. Elections are poised to exert a notable impact on market dynamics, and our ability to adapt swiftly will be crucial in navigating potential shifts in the business landscape.

How much is the logistics sector influenced by the quality of road infrastructure?

Undoubtedly, infrastructure and strategic positioning are paramount for every logistics center. A robust road infrastructure plays a pivotal role in facilitating the seamless transportation and distribution of goods and materials, significantly influencing overall efficiency. This, in turn, directly impacts costs and competitiveness within the logistics industry.

I believe the current phase underscores a pressing requirement for targeted investments in modernizing the infrastructure. Such investments are crucial to aligning the infrastructure with current demands, thereby enhancing the performance and overall attractiveness of the region for global businesses.

Well-maintained roads, highways, railways, ports, and airports are always crucial topics in our discussions with potential new commers in both the production of logistics fields. Everybody is aiming for a smooth movement of goods from production centers to distribution hubs and ultimately to the final consumer, at the lowest possible cost. And it is not only about the main backbone of the road infrastructure, namely highways. The quality of infrastructure for last-mile delivery, including urban roads, traffic management systems, and delivery hubs, can also affect the overall efficiency and cost-effectiveness of delivering goods to end consumers, so local authorities should be very smart when dealing and planning all these aspects. But I don’t think that good infrastructure is enough. Efficient customs procedures and trade facilitation infrastructure, such as ports with modern container-handling facilities and streamlined customs processes, can significantly impact the speed and cost of moving goods across borders.

And finally, energy and utilities infrastructure are also a critical factor for the logistics sector. A reliable supply of energy and fuel is critical for the functioning of logistics operations, such as transportation, warehousing, and distribution. Dependable utilities infrastructure is essential for maintaining the continuity of logistics activities.

From my perspective, a steady growth in the number of the industrial logistics projects is to be expected, albeit at a more moderate pace compared to the rapid growth experienced in previous years. The uptrend in the industrial sector was triggered by the inclination of foreign companies to relocate their economic activities in our country. Their choice was influenced not only by factors like the rental rates, but also broader considerations such as the fiscal environment, workforce cost, and the productivity of human resources. Whether it’s for industrial or retail projects, an intense competition to attract foreign investors exists between various actors: developers, investors, brokers, governments, lenders, etc.

It is of utmost importance to pay close attention to what the market demands are and be ready to swiftly change the outflows of our capital towards a well-developed composition that suits the client’s needs. In the early days, logistic projects were associated with warehousing, which later evolved into an integrated solution comprising of production spaces, offices, and spaces suitable to enable circular economy activities, thus shaping the build-to-suit product.

We maintain a strong development pipeline focusing on new and existing projects.Currently, we are engaged in an ongoing project in Craiova for a client who plays a significant role in the circular economy strategy, namely RETURO. Additionally, we have plans to initiate the development of Otopeni City Logistics and Chitila City Logistics, both part of the “City Logistics: Last Mile” series. New cities like Brasov, Bacau, Cluj are also in our attention with new potential development projects under planning.

The expansion of Constanța Business Park remains a central focus, with primary emphasis on the construction of the third and fourth buildings, as well as the intermodal platform and retail park. The expansion aims to significantly strengthen the park’s logistical capabilities, solidifying its position as a strategic business hub for seamless transportation and enhanced connectivity with the help of its intermodal terminal.

Predicting the most dynamic real estate sector in 2024 is challenging, as it depends on various factors such as geopolitics, economic conditions, government policies, and societal trends. However, several trends have been shaping the real estate sector in recent years and are likely to continue to influence the market in 2024 and beyond.

The integration of technology in real estate, such as PropTech (property technology), is likely to continue transforming the sector. This includes the use of big data, artificial intelligence, and virtual reality in property management, sales, and marketing. A new real estate sector is in our attention as developers, namely data centers.

Urbanization and mixed-use developments are a concept I believe in. With the ongoing trend of urbanization, mixed-use developments that combine residential, commercial, and retail, logistics spaces in walkable communities are likely to remain popular, especially in urban areas.

I also believe that affordable housing is a good trend to watch a follow in the next years. The need for affordable housing remains a critical issue in many parts of the world. Governments, developers, and investors are likely to continue focusing on affordable housing solutions to address this challenge.

I believe that digitalization and transition to a green economy brings both opportunities and challenges; balancing those can give businesses the edge to strive. Primarily we are considering aspects such as process digitalization, use cases of AI, innovation in construction technologies, data gathering and utilization to identify market trends.

In the green economy context, our goal is to establish sustainable environments that facilitate optimal resource utilization and support the adoption of renewable energy sources. This strategy not only helps us save substantial capital but also contributes to a meaningful reduction in our carbon footprint. Furthermore, in ongoing discussions with our tenants, our focus is on integrating green energy solutions, such as installation of photovoltaic panels.

Energy efficiency and green certifications and standards for buildings become crucial factors to consider when assessing the value of an investment and the future generated income. Smart buildings become a necessity, not only marketing gimmicks.

In 2024, digitalization and the green economy are expected to have a significant impact on the real estate sector. It will lead to the increased adoption of smart building technologies, which encompass IoT devices, advanced energy management systems, and integrated building management platforms. These technologies will enhance operational efficiency, reduce energy consumption, and improve occupant comfort.

Virtual property viewings are present in our business processes. Digitalization will continue to drive the use of virtual reality (VR) and augmented reality (AR) for property viewings, allowing potential buyers and tenants to tour properties remotely. This can streamline the property search process and provide a more immersive experience for prospective clients.

Real estate companies will rely on data analytics and artificial intelligence to make informed decisions about property investments, market trends, and portfolio management. Data-driven insights will play a crucial role in identifying investment opportunities and optimizing property performance.

The digitalization of real estate transactions will continue, with an increasing number of property sales and leases being conducted online. This trend will streamline the transaction process and make it more convenient for buyers, sellers, and tenants.

The green economy concept is driving a greater emphasis on sustainable building practices, including the use of environmentally friendly materials, energy-efficient design, and renewable energy solutions. Digitalization and green economy will shape the real estate sector in 2024 by driving technological innovation, sustainability initiatives, and a shift towards more efficient, environmentally conscious properties and communities. These trends will not only influence property development and management but also impact the way real estate transactions are conducted and how properties are marketed to prospective tenants and buyers.