|  16.12.2014

Romanian real estate sector is turning the corner

The Romanian real estate market is still in an early stage of development but has a good perspective of growth. The specialists across different industry subsegments largely agree on the promising signs on real estate market despite having witnessed a period of stagnation in 2012

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EY Romania




Market overview

The consolidation of market fundamentals corroborated with the improvement of the economic environment provide reasons for investors to consider the Romanian real estate market as a destination for potential investments. 2013 was dominated by retail transactions, five of the seven deals closed being focused on the retail segment. As the real estate sector is benefitting from a strong economic recovery with GDP growth of 3.5% in 2013, year 2014 came with an optimistic perspective in terms of potential deals on the commercial and office segment.



The volume of transactions doubled in size in 2013 as compared to the previous year, reaching EUR 300 million. The investment fund NEPI continued to dominate the market, investing in half of the transactions closed.


Private equity funds were not attracted to invest in Romanian real estate market, being mostly dormant in the last 2 years due to lack of substance on the market. However, the Emerging Trends Europe’s survey shows a significant upturn in expectations in 2014. More than 50% of respondents say availability of debt for refinancing or new instruments will be moderately or substantially greater. For equity, they state an even more bullish note with nearly three quarters expecting greater availability. Also, the new turbulent context could make Romania even more attractive, as investors still believe in the potential of the region in their search for value and yield.


Alongside the economic recovery and an increased prospective activity, the Romanian real estate market holds an advantage over more mature markets from CEE countries in terms of premium yields of 100-250 bsp. In spite of a strong competition from mature markets such as Poland and Czech Republic, Romania presents a more attractive risk-return profile mainly due to excellent growth in 2013 (GDP of 3.5%) and an expected growth rate of 2% in 2014.


Bucharest office market - looking more attractive

The office market stock increased by 116,000 sqm in 2013 from approximately 1.5 million sqm delivered last year. Almost 70% of this increase in stock was generated by the completion of Sky Tower and Floreasca Park. The current tendency among developers is to obtain pre-lease transactions given the high absorption rates and the exigencies of tenants. In Q1 2014, the pre-lease transactions include Vodafone with 16,000 sqm in Bucharest One, Endava with 4,500 sqm in Afi Park 3 and Schneider Electric with 3,100 sqm in Green Court.


Future prospects are focused on the completion of Green Court and Hermes Business Park due to a scarce offer of central office spaces and the decision of tenants to reduce costs concomitantly with an improvement of quality of occupied spaces. In 2014, 3 projects kicked off, namely: Afi Park 4, 5 and Bucharest One.


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