All the ingredients to ensure a new year of growth for the real estate market are in place, participants to the 16th edition of BR’s Realty event agreed, albeit there are also concerns about possible threats to growth. The event has brought together more than 160 industry representatives to talk about the state of the market and new developing trends.
The local real estate market remains on an upward trend in 2017, building upon a record growth in 2016, industry representatives discussed during the event. Despite this optimism, there are however concerns about the overall evolution of the economy and the impact that might have on real estate as well.
“Yes, 2016 has been a record year but if you follow the news and hear about the measures our government is working on, things no longer look that rosy. There are a lot of risks that can harm the economic growth,” said Ilinca Paun, managing partner at Colliers International. Her concern is shared by developers themselves. “We are all following political developments closely. They seem very revolutionary. The concern we have about them as a business community is to what extent these are sustainable and can actually be implemented. Romania already posts a high growth rate so it is hard for me to see how this can be increased even further in a sustainable way,” said Ovidiu Sandor, the CEO of Mulberry Development. Leaving this aside, the economic outlook is a positive one, he added.
There are two major risks that could affect growth one of which is a possible rise in instability which could finally affect business decisions, said Daniel Florescu, the country manager at Kinnarps Romania. “The second risk is related to the work force considering that in Romania the work force does not migrate,” he explained.
Alexandru Niculescu, VP of operations Bulgaria, Hungary & Romania at eMAG was another panelist to talk about challenges in securing the right labor force. “We want to attract creative workforce at costs that can be supported by the business,” he explained.
There are additional risks coming from abroad, pointed out foreign investors. “We are looking for new opportunities and of course there are risks that we see some of which are linked to external forces. There are things happening, including geopolitical that could affect the market to some extent. On the other hand we see a growth of both supply and demand which could be mismatched and there is a risk for oversupply on some markets,” said Mindaugas Valuckas, CEO and partner with Lithuanian developer Hanner.
All this brings about question about future growth patterns for the local market. “We are very positive judging from our own numbers. However, having in mind the last years’ experience and trends elsewhere in Europe, it is important to have a responsible development on all the segments of the real estate market. I think there are problems when more than what is necessary is being built and when infrastructure and demand don’t match this development,” said Iuliana Ghimpu, the retail leasing director at Anchor Group.
The various segments of the real estate market are impacted by different kind of threats, pointed out Alexandros Ignatiadis, co-founder of Octagon Contracting & Engineering. While residential is affected mostly by domestic developments, when it comes to office and retail, the threats have mostly to do with external factors, he explained.
Nevertheless, for now growth looks like the way forward and it is welcome after years of tepid developments, concluded Antoniu Panait, the managing director of Vastint Romania. “One thing is for sure, Romania needs investments and I am glad to see that there are players doing that,” he explained. And ultimately, the optimism of the real estate market is good news for other industries as well, including the related field of energy, added Catalin Ioan, direct sales manager at Enel.
End of year forecast for every segment of the real estate market
The vacancy rate has dropped to below 10 percent for the first time in nine years in 2017. We believe that it will remain stable by year-end. We are talking about a mature market, we do not see a dramatic increase, said Monica Vasile, senior broker, Office Agency, Cushman & Wakefield Echinox
New office developments poles are western Bucharest and pending on the development of the subway infrastructure, northern Bucharest, said Andreea Paun, member of the Advisory Board of Unirii View.
Demand for new office space comes mainly from IT players in cities like Timisoara, just as it does in Bucharest, according to Vlad Vela, general manager, Werk Property Group.
There is a developing trend of companies active outside Bucharest now expanding in the capital as well, according to Andreea Paun, member of the Advisory Board of Unirii View.
2017 will be more dynamic for the residential market than last year with demand further growing. Therefore we need more buildings. Annually, we should have 70,000-80,000 to meet demand, said Dorel Nita, head of the real estate analysis division at Imobiliare.ro
There is predictability about the Prima Casa for the next five years and this helps the market, said Gabriel Voicu, director New Homes Division, Coldwell Banker.
This year, there are 12,000 housing units under construction in Bucharest and the surrounding areas that should be delivered, he added.
We rely on consumption going up this year, but we try to remain cautious. We expect retailers to continue their development plans, said Ruxandra Bese – head of development at Immochan Romania.
There is an increased interest of investors in the industrial sector, on manufacturing, mainly from German and Korean companies, from the perspective of the work force and the product that can be developed here, said Roxana Dudau – associated partner, Head of Real Estate Department, Noerr.