Race for quality real estate assets intensifies, increased activity in the hospitality segment

The investment volume on the real estate market in H1 2019 amounted to almost 410 million euros, a 6% increase compared to the similar period of last year, when the corresponding figure for investment transactions was of 386 million euros, according to Cushman & Wakefield Echinox calculations and estimates.

At the Central and Eastern European (CEE) level, the Romanian market attracted around 10% of the total investment volume of 4.1 billion euros recorded in Poland, the Czech Republic, Slovakia, Hungary, Romania and Bulgaria. The first place was occupied by the Czech Republic (1.9 billion euros, with a share of 45%), which surpassed Poland, the country where an investment volume of about 1.3 billion euros (31%) was registered. Romania ranked 3rd, surpassing Hungary (7%), Slovakia (5%) and Bulgaria (2%).

At the local level, the most active sector was again the office sector, with a share of 53% of the total volume, followed by retail (28%), while the industrial and logistics sector had a share of 18%. In regards to geographical distribution, Bucharest attracted 40% of the total real estate investments in Romania, being followed by Cluj-Napoca with 32%, while the other transactions were concluded in several cities.

Regarding the H1 activity, we consider that an important factor that negatively influenced the investment volume was the banks’ reluctance to finance such acquisitions due to the uncertainties caused by the fiscal measures announced by the government at the end of last year. Subsequently, the government re-assessed and revised those measures, so that the impact on the banking system was much lower than initially estimated, which unlocked corporate lending and which will therefore accelerate the closing of transactions in the second part of the year. Thus, we anticipate that this year’s investment volume will substantially exceed the 1 billion euros threshold,ˮ Tim Wilkinson, Partner, Capital Markets, Cushman & Wakefield Echinox said.

The largest transaction in terms of value was concluded by Dedeman, which purchased The Office project in Cluj-Napoca, with a total rentable area of ​​63,000 sqm, for 130 million euros, from NEPI Rockcastle and Mulberry Development. This transaction marks the consolidation of Dedeman’s portfolio, which is becoming an increasingly important player on the local office market. By acquiring The Bridge project, Dedeman had also made the largest transaction on the Romanian real estate market in 2018.

Another important transaction was the one related to Oregon Park C in the Floreasca-Barbu Vacarescu area, the last building of the Oregon Park project, which was sold by Portland Trust to Lion’s Head Investments for an estimated 60 million euros.

When it comes to the industrial segment, the most relevant transaction was the acquisition of the A1 Logistic Park project located at km 13 of the A1 motorway by CTP, the largest owner of industrial spaces, for approximately 40 million euros.

We are witnessing increased competition between a significant number of investors, especially in regards to premium real estate assets. Those investors are currently paying more attention to completing the transactions in which they are involved, an aspect that will result in a yield compression over the short and medium terms. At the same time, we consider that, besides the office and industrial transactions, we will see increased activity in the hospitality segment,” Tim Wilkinson added.

Bucharestcluj-napocaCushman & Wakefield EchinoxDedemanestimateshospitalityindustrialinvestmentlogisticsNEPI RockcastleofficeOregon Parkreal estate assetsretailRomaniaThe Officetransactions
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