The value of signed real estate transactions in the first nine months of 2018 reached EUR 520 million, according to the real estate consultant JLL officials. The company estimates that the value will increase to EUR 800-900 mln by the end of 2018.
Bucharest remains the strongest market with 76 percent of the transactions. Office transactions covered 56 percent of total transactions, and 30 percent out of these were retail projects.
„The problem with the Romanian market is that the associated risks is higher than Greece. Last year we accounted only for 8 percent of the region, ” said Andrei Vacaru, hed of Capital Markets at JLL.
The office market
“When it comes to delivering projects, things have stagnated. Net demand is over 120,000 square meters. We believe it will reach the same level as last year, of around 300,000 sqm, ” Marius Scuta, head of Office Department & Tenant Representation, JLL explained.
”The unoccupied rate is about 8 percent and the rent remains stable at maximum EUR 18.5/sqm. Yet, most rents in Bucharest are around EUR 14 and 16/sqm. But there is inflation pressure on rent prices” Maria Florea, head of Office Agency, JLL said.
According to Florea, developers are still looking for areas close to a Metro station and it’s a risk to develop in areas like bulevardul Expozitiei, based on authorities promises to expand the subway network. Co-working is becoming more and more important.
The industrial and logistic market
The industrial market delivered 500,000 sqm in 2018. ”We are approaching 4 million square meters. And there are 300,000 square meters under construction, so I think the 4 million sqm milestone will be reached by the end of the year. We have around 195 sqm/thousand inhabitants. We have become the second market after Poland and we estimate a total demand of over 400,000 sqm, ”said Costin Banica, head of Industrial Department JLL.
Total demand for industrial space reached Q3 2018 to nearly 200,000 sqm, and 58 percent of the total space demand was recorded in Bucharest, followed by Cluj and Timisoara.
The retail market
The retail market delivered only 17.000 sqm in the first half of the year and it will reach around 155,000 sqm by the end of the year, in a new mall, Shopping City Satu Mare, and two expansions, ERA Park Iasi and Iulius Mall Timisoara. The rent is around EUR 65-75/sqm for dominant shopping centers, ”says Corina Stamate, center manager JLL.
The total stock of modern retail space reached approximately 3.1 million sqm, resulting in a density of 151 sqm/1,000 inhabitants. More than 1.1 million sqm are built in Bucharest, Cluj-Napoca, Timisoara, Iasi, Sibiu and Constanta are the main beneficiaries of dominant projects outside Bucharest.
”Technology and digitization have become ubiquitous, so the structure of the industry is in a continuous process of transformation. The virtual world has not affected traditional trade, but on the contrary these concepts have been reciprocal, ”Stamate stated.
In Romania, we are still in the early stages of the technological revolution at the level of shopping experience, but we see a growing interest both from retailers and from the owners of shopping centers to combine technology with the traditional, so as to create an environment at the level expectations of buyers. We discuss issues including sensations level for business units and centers to provide the most complete experience. From smell, merchandising, from the pop-up store to the flagship, everything is rethought in terms of consumer interaction with the brand.
The expected transactions until year-end
The are few expected transaction to be closed until the end of the year.
Transactions of more than EUR 50 million euros are about 3 office transactions in Bucharest, an industrial project, and a retail one in a secondary city and an office one the same.
The average value of a transaction this year is between EUR 30-40 million around the same compared with the next year.