Total value of real estate investments up to EUR 940 million in 2018

The total value of real estate investments in the office, commercial, industrial, office and commercial segments in 2018 amounted to EUR 940 million, and Romanian investors were involved in about 25 percent of the transactions, according to a report by CBRE Group.

The volume of transactions completed last year has a similar level to the one recorded in 2017, but 30 percent higher than 2016, according to the CBRE Group’s market report. For the fourth consecutive year, the office space sector attracted the largest number of transactions, with 55 percent of the total agreements reached in 2018.

The ranking is completed, at a considerable distance, by commercial spaces which accounted for 33 percent of transactions, 7 percent for industrial premises, while hotels and other transactions count for the remaining 5 percent.

The Bucharest real estate market had the most intense activity in 2018, with 77 percent of the total investments registered at the national urban level. Domestic investors were the most active, accounting for almost 25 percent of total transactions, followed by South African funds, which accounted for 18 percent, and by Portuguese investors with 13 percent.

According to CBRE, the largest transactions in 2018 took place in the second half of the year, on the office space and retail space segments. The largest transaction was the sale of The Bridge (I and II) office project, which passed from developer Forte Partners to Dedeman, following an agreement worth EUR 150 million.

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The second transaction, in value terms, aimed to change the share structure of the ParkLake Shopping Center and amounted to EUR 120 million. Thus, Sonae Sierra became the sole shareholder of the shopping center, by acquiring the 50 percent stake in Caelum Development.

Among the most valuable transactions in 2018, the sale of the Oregon Park office complex, developed by Portland Trust, to Lion’s Head Investment for EUR 110 million, sold the Militari Shopping Center, the West Bank commercial center, to the Southern Investment Fund -african, Mas Real Estate, with 95 million euros, and the sale of The Landmark office project to investment funds Revetas Capital and Cerberus Capital Management for EUR 65 million.

In 2018, the average transaction value fell by 5 percent compared to the previous year to EUR 29 million.

Offices in Bucharest attracted the highest interest, accounting for 97 percent of all transactions in this segment. In the case of commercial premises, 69 percent of the agreements covered projects in Bucharest, and the rest were in other cities in Romania.

Raw yield (return on Class A projects in the most rated areas) is declining for all sectors – industrial, office and retail. The evolution of local yields is in line with the trend in Central and Eastern Europe, which is a sign that the market is active with a good level of investment and transactions, analysts say.

The gap between Romania and other countries in the region, such as Hungary and Slovakia, has diminished, but there is room for further decreases in this yield in all sectors of the domestic real estate market. Thus, the lowest earning performance was recorded by the commercial sector – 6.5 percent, followed by the office space segment – 7 percent and by the industrial premises, with 7.75 percent.

Real estate analysts expect that in 2019 investment activity will have a similar pace to that of 2018 due to important agreements that are currently in different phases of negotiation. It is estimated that premiums will continue to decline slightly, especially in the office space market.