The Romanian real estate investment market could reach the 1 billion euro threshold again this year

Trading activity was dominated by industrial and retail assets for the second consecutive year, marking a significant change from previous years when offices were predominant. Environmental, social and governance (ESG) criteria are becoming increasingly important in the decision-making process of real estate investors, banks and tenants, Colliers consultants point out in their recently published report, explaining that while the long-term market potential remains significant, there is short and medium term challenges.

"Compared to the previous year, 2024 is much more active. There are new investor names and several deals in the works that have a good chance of closing this year. One of the main challenges remains the availability and cost of financing, which is currently around 6%. In addition, we are seeing increased attention to the technical quality and ESG standards of properties. Funding conditions are expected to improve, supported by high liquidity in financial markets and the ECB's interest rate cuts, even if this process is slightly delayed. Banks' interest in certain real estate sectors, especially offices, is quite limited, but there are exceptions depending on the financier, the quality of the property and the experience of the borrower. The industrial sector is still the favorite on the banks' list, followed by retail and residential, where financing decisions are made according to the viability of each individual project. Refinancing, meeting ESG standards and other factors specific to the real estate sector or the local context continue to play an important role in the decisions of buyers and sellers," points out Anca Merdescu, Director of Investment & Debt Advisory at Colliers Romania.

The largest transaction of the year was the sale to CTP of Globalworth's industrial portfolio, which included approximately 270,000 square meters of warehouses in several cities in Romania, plus land for future projects, for approximately €168 million. This is one of the largest industrial transactions in Romania and the largest since the sale of Europolis Park to Singapore's GIC in 2016. The second largest transaction in 2024 was the acquisition of Expo Market Doraly by WDP for approximately 90 millions of euros.

Two other major transactions in the office market, brokered by Colliers, had a significant impact on stabilizing market yields this year. The first transaction involved the sale of The Landmark office park, a class A space in the area of ​​Romana Square with a leasable area of ​​23,500 square meters, sold by Cerberus Capital Management and its regional partner, Revetas Capital. The second transaction, advised by Colliers, was the acquisition of the myhive Victoriei office building by AFI Europe from IMMOFINANZ, valued at approximately €27 million, with Colliers and Cushman & Wakefield Echinox appointed as co-exclusive agents.

"These two transactions are emblematic for the office market in Romania, strengthening the interest and confidence of investors in this real estate sector. The acquisition of myhive Victoriei will bring a positive change to the Old Center of Bucharest by renovating an emblematic building of the capital, and the sale of The Landmark project is the most important transaction in the office market in the last year and a half, being completed in a context where the interest banks for certain real estate sectors, especially offices, is quite limited. It also demonstrates that there is liquidity in the local real estate sector, setting a precedent for future transactions and helping to increase the confidence of potential new investors in Romania", adds Robert Miklo, Director of Investment Services at Colliers.

Another notable transaction is the sale of Funshop Park Turda by Scallier to BT Property for approximately €15 million. This represents the second transaction of BT Property, a division of Banca Transilvania, and strengthens the presence of a new type of capital on the local market. At the beginning of the second semester, the sale of the logistics parks owned by Global Vision and Globalworth to the Belgian developer WDP was completed, thus the volume traded in the industrial sector increased this year by over 100 million euros.

At the level of Central and Eastern Europe (CEE), Romania recorded in the first half of the year the best performance compared to the other five major economies of Bulgaria, the Czech Republic, Hungary, Poland and Slovakia), shows the latest report "H1 2024 Investment Scene", published by Colliers. On average, volumes for the region were up 29% year-on-year to around €3.3 billion, but down 41% compared to the first half of 2022.

The share of transactions with offices is also decreasing in CEE - 31% of traded volumes, while transactions in the retail sector contributed 32%. The industrial and logistics (I&L) sector ranked third with a share of 24%.

In the current context, Colliers experts estimate a regional transaction volume of around 5.5 billion euros for the entire year 2024, representing approximately half of the 10-year average. Poland dominated regional volumes, accounting for nearly 50% of the total, due to significant growth in local activity in the second quarter.