The property investments in Central and Eastern Europe amounted to EUR 12.56 billion in 2016, representing a 42 percent increase compared with 2015 and the third highest CEE regional investment volume since 2007, when they stood at EUR 15.81 billion.
Last year represented a record at a country level, with the highest ever volumes registered in the Czech Republic and Slovakia and second best ever results recorded in Poland, Hungary and the SEE region.
For Romania, the 2016 property investment volume is estimated at EUR 890 million, a value almost 35 percent higher than the one registered in 2015. However, the number of transactions was slightly smaller, meaning that the average deal size increased. Bucharest accounted for over 70 percent of the total investment volume, less than in 2015, showing that liquidity in secondary cities has slightly improved. Market volumes were dominated by office transactions (45 percent), while retail and industrial accounted for close to 26 percent each.
Also, 2016 was the year of the entry of several new names on the Romanian real estate market, either through the purchase of regional platforms or, individual assets. Among them Logicor (Blackstone’s European industrial division), GIC, PPF and Growthpoint.
JLL forecasts that 2017 will remain positive, considering that the supply of product can match the strong levels of demand.
”Market fundamentals remain robust. The macro-economic forecast for Romania is positive. The country was the EU’s top performer in 2016 (with GDP growth estimated at 4.8 percent) and is expected to hold this position in 2017 as well, despite a minor slowdown. Occupier demand is at record high levels in all market segments. Availability of quality product is increasing and there is significant yield spread between Romania and Poland or the Czech Republic. On the financing side, terms and conditions have improved significantly over the past year getting closer to what can be expected in the core CEE markets. Consequently, sentiment is strong, with transactions of approximately EUR 630 million in different stages of negotiation”, says Silviana Petre Badea, national director of head of Capital Markets JLL Romania.
The largest transaction registered in 2016 was the acquisition of 26.88 percent of Globalworth’s shares by South African group Growthpoint for approximately EUR 186 million.
Globalworth is one of the largest owner of office space in Romania. The most notable retail transaction was the acquisition of Sibiu Shopping City by NEPI from ARGO for a total of EUR 100 million, which represents a large single asset deal outside of Bucharest since the economic crisis.