Office building transactions reached the highest level of the last decade in 2018, as only in Bucharest 20 assets with a total GLA of 220,000 square meters and a value of more than 500 million euros were transacted, according to Romania Investment Marketbeat report, launched by Cushman & Wakefield Echinox.
A number of office buildings were also sold in Cluj-Napoca and Timişoara, as the total office building transaction volume in Romania in 2018 was of 531 million euros, representing a 55% share of the investment volume. In total, investors committed 957 million euros to the local real estate market last year, with the retail (33% market share) and industrial (9%) segments occupying the second and third positions in terms of investors’ interest.
Five of the seven largest transactions pertained to office projects in Bucharest, namely The Bridge (two buildings), Oregon Park (two buildings), The Landmark (three buildings), Campus 6.1 and Crystal Tower. At the same time, the Danone Group’s headquarters building in Bucharest, the Lascar 31 Business Center building, which hosts the European Commission’s local office, the Bucharest Corporate Center (the former headquarters of IBM and Generali) situated on Buzesti Street, the former Bank of Cyprus headquarters from Calea Dorobanti or a portfolio of four properties of the East Balkan Properties group have also changed hands in 2018.
Thus, investors have been interested both in “trophy” assets built by renown developers, with a portfolio of international tenants with long-term commitments, and also in secondary buildings, which can generate robust returns.
„The flow of new investors into Romania is expected to continue in 2019, attracted by the higher returns achievable compared to other CEE markets. With this trend, prime yields in the office and industrial markets are expect to compress by between 25 – 50 basis points. This is driven by more prime assets expected to be transacted and a higher level of competition among investors for the best properties. However, for this growth to continue to its maximum potential, it is essential that Romania promotes and continues its economic growth and does better to give investors confidence in the stability of the business environment,” said Tim Wilkinson, Partner, Capital Markets, Cushman & Wakefield Echinox.
In Central and Eastern Europe (Poland, the Czech Republic, Hungary, Slovakia and Romania), real estate properties with a cumulative value of 13 billion euro were transacted in 2018, the largest market being Poland, with a share of 55%. Compared to the previous year, the volume of transactions in the region increased by 15%. While yields on the acquisition of prime office buildings in Bucharest remained constant, at 7.25%, the investment returns continued to decline in the other CEE countries, reaching 4.75% in Warsaw and 4.40% in Prague.