The Romanian real estate investment market grew in 2020 despite the pandemic context and closed the year with a total value of investment transactions worth almost 900 million euro, which represents almost 8.5% of the total 10.4 billion euro investment volume recorded by the 6 largest countries in Eastern Europe, reveals Colliers in its latest “CEE Investment Scene Q1-Q4 2020” report. Romania almost doubled its share in the region’s turnover over the previous year and jumped into the big league, after Poland and the Czech Republic, but before Hungary, Slovakia and Bulgaria.
2020 confirmed that Romania has the potential to punch above its current weight at the regional level. In a year severely affected by the pandemic, in which Poland, Czech Republic and Hungary all saw year on year declines in volumes, Romania, Slovakia and Bulgaria all saw positive trends. Overall, volumes in 2020 declined by 24% compared to 2019 with the year closing at about 10.4 billion euro.
Poland remained leader in the region, with investment volumes accounting for 51% of the overall CEE6 total with a total value of investment transactions worth 5.2 billion euro, followed by the Czech Republic with a 26% share, thanks to a large residential portfolio sale. Romania completes the top with a 8.5% share and a volume in the area of almost 900 million euro (up by about 40% over 2019). The transaction completed by NEPI Rockcastle, advised by Colliers, involving the sale of four office projects to AFI Europe accounted for almost a third of the local investment market in 2020.
”A characteristic of the region as a whole – including Romania – is the fact that, at least until now, we did not see a material shift towards distressed sales, as most are either long-term owners or waiting for things to settle down. This is a bit of a departure from the 2009-2010 recession and could suggest that the subsequent recovery could be much swifter than it was after that downturn. Romania’s more generous yield gap, coupled with depressed yields for other types of assets, bode well for local assets in the following years”, explains Laurențiu Lazăr, Managing Partner at Colliers Romania.
The office sector was dominant all over the region in 2020 in terms of transactional activity, with a share of 41% of the total volume of investments, followed by industrial and logistics spaces that are up significantly as investors diversify into this seemingly Covid-proof sector (32%) and away from the more challenged Retail and Hospitality sectors (12%).
Bucharest has some of the highest yields in the region for the office sector (7%), compared to at most 4.25% in Prague, 4,65% in Warsaw or 5.25% in Budapest. Going forward, rents will remain relatively stable, according to Colliers International in its latest “CEE Investment Scene Q1-Q4 2020”, with prime headline still around 18 euros per square meter in the office sector in Bucharest (and an average in the region of 14 euro per square meter), respectively between 11-14.5 euro per square meter in other centers in the country.
For the next 12 months, Colliers Global investor survey „Global Capital Markets 2021 Investor Outlook Report” indicates a strong rebound. Investors’ appetite remains strong for this year but will continue to be challenged by available products and Covid-19 impact. In the EMEA region, offices are attracting solid interest, although investors are becoming more selective, preferring the large, liquid markets and winning cities of Europe.
Also, investors are seeing an opportunity to buy tracts or blocks of land like department stores and convert them into residential, offices, even centre-of-town logistics. Strong demand is evident for data centres, with more investors looking to partner with specialist operators as the scale for income-producing assets in Europe is limited. Activity is again expected to concentrate around the region’s major centres.