bne IntelliNews – BRICKS & MORTAR: The rapid economic recovery in Romania has supported real estate investments
Investment volumes in the Romanian real estate market have remained healthy since the start of the pandemic, according to a new report from JLL.
JLL reported a real estate investment volume of around 309 million euros in Romania in the first half of 2021, almost 22% lower than in the same period of 2020. This was due to the smaller size transactions – the average size has fallen to 21 million euros – while the number of transactions has increased.
“Transactions started during the pandemic were closed in the first half of 2021, proving that investors still have an appetite for commercial properties in Romania, encouraged by the rapid macroeconomic recovery,” the report said.
The capital Bucharest remains the preferred investment destination in Romania, accounting for around 69% of the total transaction volume in the first half of 2021. Other popular cities are Timisoara, Iasi and Oradea.
According to the âCEE Investment Marketâ report, the number of transactions increased in the first half of 2021, with the office sector accounting for nearly 64% of all transactions. Office transactions were followed by industrial spaces (24%), hotels (9%) and retail businesses (3%).
The biggest transaction in the first six months of the year was the sale of the Campus 6.2 & 6.3 buildings in Bucharest for around 97 million euros.
The first half of 2021 also saw the sale of the first phase of The Light and the acquisition of Bucharest Financial Plaza, as well as several smaller transactions in secondary and tertiary cities.
The most significant industrial transaction in the first half of 2021 was the acquisition of the Catalyst industrial portfolio, with assets in Timisoara, Arad and Caransebes.
Industrial and logistics space has been in demand. However, as JLL notes, âthe limited investment activity in this segment is due to the lack of product as the market is dominated by strategic players who very rarely sellâ.
The report notes that top-notch office yields in Romania are 7.00%, top-notch retail yields are 7.25% and top-notch industry returns are 8.00%. . For offices and industrial spaces, it is the same as 12 months ago, but retail returns increased by 25 basis points on the year. âRomania is still well positioned in terms of yields, as current values ââare still well above those recorded at the last peak (2007) and those currently listed in the rest of the region,â the report said.
“We expect investment volumes in 2021 to be close to the total recorded in 2020, although during this period accurate forecasts continue to be difficult to make,” according to JLL.
âNonetheless, with the vaccination process underway and given the significant amount of capital set aside targeting real estate, these forecasts could improve. Prime return may be under pressure for logistics and potentially offices,â in line with regional developments, but this will also depend on the availability and conditions of debt. â