The Romanian land market is steadily growing in activity, fueled on one hand by the development of new large scale projects and ‘potentially last minute discounted land plots available’, on the other hand, according to a recent market report published by Colliers International Romania.
“There was a lot of noise on the market in terms of prospecting activity in the past years. However, the volume of transactions remained subdued, due to both lower number of transactions, but also reduced deal sizes. After 2008, the players on the market changed their behavior. If before 2008 they were continuously buying land plots, in the last five years they alternated acquisitions with development periods. As 2011 and 2012 were two relatively good performing years in terms of transactional activity, starting with 2013 many of the players entered the development period“, said Sinziana Oprea (picture), senior associate in the land agency of Colliers International.
The average transaction volume registered a slight reduction in the past years, with more and more transactions closing below the EUR 3 million level, according to the real estate firm. Back in 2012 there were reported three deals over EUR 20 million each, but in 2013 there was only one transaction exceeding the EUR 15 million level – Benevo Capital’s acquisition of the Aversa platform (10 ha) in Obor Square in Bucharest for EUR 17.3 million, on the condition that the factory’s operations are preserved for at least three more years. “Consequently, the market was dominated by small and medium size deals, below EUR 3 million, closed by opportunistic investors and small retailers,” said Colliers International representatives.
Land prices continued to drop in 2013 – by 10-25 percent on average compared to 2012 – given the ‘increase in supply of attractive deals from banks, liquidators and distressed owners’. In central exclusivist areas, however, prices maintained their level. In Bucharest, for example, prices varied in 2013 between EUR 50/sqm in Theodor Pallady and Alexandriei Road to EUR 2,500/sqm in the exclusivist Primaverii – Mircea Eliade area.
Office and large residential developers are back in the game
This year will maintain a similar level to 2013 in terms of the transactional activity, according to Colliers International Romania representatives. Most buyers will, however, continue to be rather opportunistic. As supply is expected to remain considerably higher in relation to demand, overall prices will be on a descending trend this year as well. Similar to the previous years, the existence of a valid PUZ will weigh a lot in the buying decisions especially in case of the developers, predicts the firm.
“2014 will offer good investment opportunities on the land market. Banks, among the most active land vendors in 2013, have become more aggressive in terms of pricing. Although many of them succeeded in attracting buyers and partially ‘cleaned’ their portfolios, there are still opportunities left for investors. The positive macroeconomic outlook, the higher investment appetite of an increasing number of players, combined with a decreasing number of distressed assets available, will lead to price stabilization on the medium term (one-two years)”, concluded Oprea.
One important change is the fact that the land market – previously dominated by retailers and retail developers – now witnesses the comeback of several key-segments, such as office and large residential developers.
Over the past three years, the land agency of Colliers International Romania brokered land transactions worth a total of EUR 100 million, according to company data. Out of this, 70 percent represented transactions for retail developments, office represented 25 percent and residential accounted for 5 percent. “Major transactions assisted by Colliers land agency in the analyzed period are Benevo Capital’s acquisition of the Vulcan platform, NEPI’s acquisition of the 13 ha plot where Shopping City Galati has been developed, but also the sale of three strategic land plots in the fast developing Floreasca – Barbu Vacarescu area in Bucharest, all currently in an advanced development phase. Other clients Colliers International assisted in the acquisition process in the analyzed period are Dedeman, Interprime Properties, Intercora or Rewe Group,” according to the company.
The company’s land agency currently comprises four consultants under the coordination of Mihai Bogza and Sinziana Oprea.