One of the most important things for Romania today is attracting more capital from investors, said Gijs Klomp, Head of Investment Properties at CBRE Romania, during Business Review’s Foreign Investors Summit on Tuesday. The crisis came and left, but Romania is still an interesting destination for investments.
“The main challenge that the Romanian market has been facing since the last crisis is attracting new capital. We’ve seen here the same price increases as in the Czech Republic or Poland after they entered the EU in 2004. Many people got burned in the 2009 crisis, especially if you entered at the peak of the market. It was also causing a bad perception for those who entered in 2006-2007. But fast-forward to 2012, the market started to grow again: Romania is still a very interesting country for investment. And when you are the second largest market in the CEE, you will eventually get the second biggest real estate market. I have been here since 2000 and I have seen the changes,” said Gijs Klomp.
The perception on the country may be distorted by the media, by the subjective views that appear. But that is not always the reality; the problems Romania encounters can be found in all the other European states, starting from trust in the government and ending with education and health system.
“Of course, bad news reaches the media a lot more than the good news. If you look at the surrounding countries, we can see that the investors are looking for new places to invest and, as an investor, you want to be sure that you can exit the market without any problems. And this is another reason why we haven’t seen the biggest names in the real estate sector coming here,” says Klomp.
“Incompetence can be addressed, so that is not an issue. But you must have the product in the market for investors and Romania does not have enough good products for sale today. There are good products, but they’re not for sale,” argued Klomp, explaining that most of the properties are being kept for the long term.
“It is also important to have liquidity in the market. That also keeps some investors out because they don’t see liquidity, an easy exit,” says Klomp, adding that “just like in the stock exchange market, if there aren’t any sellers, there can be no buyers either.”
“It makes a lot of sense to invest in Romania. In the office sector, the yield is better than in Hungary. You got the same tenants, international names. Also, apart from the yield, investors look at the rent and if you can increase the rent. Compared to other countries in the area, here the rent can still grow,” says Klomp.