Gijs Klomp, head of INVESTMENT PROPERTIES at CBRE Romania, tells Business Review about the current status of the Romanian real estate investment market and its perspectives, and highlights the sectors expected to be the most dynamic in terms of transactions in the upcoming period.
By Anda Sebesi
How is the Romanian real estate investment market looking right now and how is it different from the CEE one?
The Romanian real estate investment market is improving in terms of liquidity on the back of more supply attracting a greater diversity of buyers. Investment volumes are expected to top those seen in 2018. The main differences between CEE and Romania remain pricing (Romania has not had the significant yield compression seen in more established CEE markets) and the buyer’s universe (Romania lacks the international core investors as well as the domestic institutional capital that has been the driver of other markets).
In your opinion, what are the market’s perspectives?
The perspectives are encouraging as the availability of institutional supply is up, which in combination with the very attractive yield spread attracts new capital. In the second half of 2019, we expect to witness the signing of several large deals which at are currently under final settlements. Taking the above into account, we estimate for the entire 2019 a transactional volume up to 15 percent higher than the one recorded in 2018, surpassing the EUR 1 billion threshold. A similar value has not been reached since 2014. Prime yields are expected to suffer a mild compression towards the year’s end, especially for prime office properties, given the quality of the projects that are in advanced stages of negotiation. This is especially true considering the mandates on the market for the sale of a number of quality office portfolios that gather class A projects with low vacancy rates and blue-chip tenants located in Bucharest’s office market hotspots.
Which sectors of the Romanian real estate market are expected to be the most dynamic in terms of transactions?
With almost half of the total investment volume, the office sector hasn’t given up the leading position it also held in H1 2018. The retail segment claimed 33 percent of the total, while the industrial and hotel sectors attracted a combined share of 19 percent. But this transaction split can also be seen in the CEE markets. Even though the overwhelming majority of the office deals were concluded in Bucharest, the largest single transaction signed nationwide amounted to about 80 percent of the total office volume. Hence, Dedeman’s acquisition of the project named The Office and located in Cluj from NEPI Rockcastle and businessman Ovidiu Sandor at an estimated value of EUR 129 million was the highlight of the transactional activity during the first semester of the year. Cluj is one of the most dynamic regional cities. Another office project, Liberty Technology Park, was sold in the second part of the year to White Star Real Estate in partnership with a top private American University by Fribourg Development, the real estate division of Fribourg Capital. Regional cities are also gaining more ground in the CEE markets, as we have seen more deals in regional cities in these markets than in previous years, reflecting the maturity of secondary Romanian, Czech and Polish cities.
What are your plans as the Head of INVESTMENT PROPERTIES at CBRE Romania?
My plan is to offer high quality services to our clients leveraging on the unique combination of CBRE’s deep insight into the local real estate market (thanks to our leasing, property management and valuation business lines), our EMEA INVESTMENT PROPERTIES network which gives us great insight into international investors’ needs, and my experience both as an investment agent as well as an investor, allowing me to understand investors’ needs and help build bridges between buyers and sellers.
With over 17 years of experience in real estate, Gijs was involved in investment transactions worth over EUR 2 billion. He set up the ING Real Estate Investment Management business in Romania, worked for consultancy companies JLL and CBRE and in 2016, he joined NEPI, the largest retail property landlord in Romania. Currently, he is Head of Investment Properties at CBRE Romania.