The year 2018 will most likely attract at least the same volume of investment as the previous year, of EUR 1 billion, according to Savills real estate research company.
Investment returns remained roughly the same as in 2017, with office investment returns falling by 0.25 percent, while retail yields rose slightly by 0.25 percent. The fact that the products available on the market are more numerous, especially on the office segment, the postponement of some transactions started last year, as well as the increased interest of new foreign investors on the Romanian market, will influence in 2018 the development of the domestic investment market.
Although in the first quarter of 2018 the investment market did not have a significant evolution, in the second quarter the volume of transactions increased, balancing the total value of investments for the first semester of this year.
The level of investments did not reach the level of the first semester of last year, being 20 percent lower than in S1 2017, it reached EUR 428 million, with transactions of EUR 384 million in the second quarter. The most intense investment activity was registered in the office segment, with a share of 65 percent of the total value of the transactions. The most important transaction on this segment (EUR 170 million) was the sale of the Oregon Park office complex in Bucharest to Lion’s Head Investment, a South African capital investment fund and a new player on the Romanian investment market
With a share of 32 percent of total investments, the retail sector recorded a significant transaction in Bucharest, where Militari Shopping Center was sold for EUR 95 million to another South African investor, MAS RE. The other two cities where some small retail products attracted investors were Sibiu and Brasov. Due to the shortage of new products, there was only one important transaction in the industrial market in Brasov, where WDP acquired an industrial project of 20,000 sqm for EUR 11 million.
Transactions of EUR 300 million in progress in S2
With transactions of more than EUR 300 million in progress and new products that will most likely appear on the market, the second half of the year will sustain a sustained investment activity. New investors are emerging on the Romanian market, encouraged by the results of the established investors.
Another change could occur with the growing interest of some internal actors who have tested the market in recent years. Dominated by foreign investors, especially South African investment funds, Romania has become an entry point for South African institutions wishing to expand their portfolios in Central and Eastern Europe. The Romanian investment market records the highest level of investment returns in Europe (7.25 percent to 7.5 percent for office buildings).
By the end of the year, the volume of real estate investment will most likely reach the level of EUR 1 billion recorded last year. Office buildings will continue to be the most sought-after products.
With the delivery of new industrial projects and the need for expansion of existing players, there are chances that by the end of the year this segment will have some important transactions. Investment activity on the retail market will most likely focus on secondary markets. The capital will remain the top destination for investors due to access to quality products, the availability of qualified labor force and the presence of the most important economic operators in the country.