In the first semester of 2012, Romania registered one of the lowest levels of real estate investment volume since H1 2005, according to CBRE Romania`s Property Investment Report for H1 2012. Only two transactions were closed in H1 totaling EUR 55 million. These two transactions were the sale of the 35,000 sq m Nokia factory in Cluj to white goods producer De’Longhi and the purchase of the City Business Centre scheme in Timisoara by NEPI.
According to CBRE, investors continue to target the local market, but lack of financing and problems in the eurozone countries have made them risk averse.
“Romania is starting to look increasingly attractive to investors as the search for returns in this region spreads away from the lower yields seen in the core markets. But the lack of financing and problems in the eurozone countries have led to a low level of real estate investment volume in the first half year of 2012 and have made investors risk averse leading to long decision making processes and increased due diligence”, said James Heyworth Dunne, head of capital markets and valuation department CBRE Romania.
The highest investment level in Central and Eastern Europe was registered in Russia and Poland. In the first half-year Russia has recorded the largest investment volume, which exceeds EUR 900 million, followed by Poland, with over EUR 800 million, and the Czech Republic with approx. EUR 180 million.
Only two large real estate transactions in H1 2012
The sale of City Business Center in Timisoara to the South-African investment fund New Europe Property Investment PLC (NEPI) was the largest transaction between January and June 2012. Currently,CityBusinessCenteroffice park is leased to IBM, PwC, Vodafone, Alcatel-Lucent, Wipro Technologies, BCR, Deloitte and Microsoft. The project also includes two office buildings, one of which is currently under construction. “NEPI is a very active player on the Romanian market with a portfolio including office buildings, but also commercial centers, warehouses and logistic areas,” reads the report.
The second transaction finalized in H1 2012 was the sale of the 35,000 sq m Nokia factory in Cluj at a price of EUR 10 million to De’Longhi. The new owner plans to begin production in this location in the fall of 2012.
The prime yields in Romania have been stable on 3 markets: retail (commercial centers and street spaces), offices and industrial, according to CBRE. Prime yield for office sector is stable at 8.00 percent, based on investors’ offers on the local market, and in the retail and industrial sectors prime yields remain stable at 8.75 percent (shopping centers) and 10.25 percent (warehouses).
By comparison, in Warsaw, in the first quarter of this year, the prime yield in the office sector was 6.25 percent, while as in the industrial sector it was 7 percent and in retail it registered a 6 percent level. A similar level of prime yield was recorded inPrague, with 6.50 percent for offices, 8 percent for the industrial segment and 6.25 percent for the retail sector. Budapest has registered on the office, industrial and retail segment prime yield of 7.25 percent, 8.5 percent and 7 percent.