But could the difficulties of the local market persuade some foreign names to pull out? Some smaller international consultants are likely to give up on their Romanian activities, Krick believes. “For the larger consultants, it's also possible, but there really needs to be some additional tough times for that to happen. There are some groups out there with difficulties in funding themselves. If the crisis deepens, these groups with funding issues might need to potentially pull out from some markets in order to save the firm, but it will not be due to losing so much money here, rather another issue in their home markets,” Krick explains.
The firm has seen demand on the valuation and office and retail leasing side, as well as on project management, at a similar level to last year. “We're seeing a couple of leasing deals a month on average, ten to 20 office and retail leasing deals – usually these are weighted towards the end of the year, as the second half of the year is when we do most of our deals,” says Krick. Leasing deals typically range from 500 to 2000 sqm per deal, he adds, saying the firm saw leased areas dropping in the first quarter of the year.
On the valuation segment, with demand coming from both local and foreign developers and investment funds, JLL has seen local portfolios dropping in value by 10 to 25 percent on average. “It could be higher or lower, depending on each case,” says Krick. “The drop in portfolio values is probably comparable across the CEE region, but it depends on the perceived level of risk of each country. Those countries perceived as being more risky have probably seen property value drop by a larger percentage.”
Romania is perceived as riskier than Western markets and even other CEE countries, because the real estate market here is not yet as developed as in the rest of the region. “Once the economy starts to grow in Romania we should see some positive effects of that on real estate, and we want to make sure we are here when the market starts to pick up,” Krick concludes.