Real estate market registered a spectacular evolution in 2017, with record volumes of activity on the industrial and office sectors, record demand in most of the sectors and growing occupancy rates, Activ Property Services, one of the main real-estate consultants in Romania, shows in its recent Market Report.
Rental levels were generally stable, with some increases reported for retail and industrial spaces, while residential prices increased by an average of 10 percent.
A 2-digit increase in retail sales (10.7 percent), for the second consecutive year, maintained a widely spread optimism in the market, influencing both tenants and landlords/developers, with effects on the market fundamentals. Non-food sales jumped by 13.2 percent yoy, while food sales recorded a 6.8 percent growth.
Shopping centre stock increased by just 66,700 sq m GLA in 2017, an almost 70 percent drop from the previous year (212,780 sq m GLA). Following this unusual evolution, the existing shopping centre stock decreased by 16,120 sq m throughout 2017, reaching 3,161,510 sq m GLA at year-end. For the first time in 15 years, there were no new openings of shopping centres in Bucharest.
The local market has entered a mature phase, with the shopping centre development activity planned for 2018-2019 being represented especially by extensions. A new stock of 93,200 sq m GLA is announced for delivery in 2018, including a single new scheme (Shopping City Satu Mare) and 4 extensions.
As regards the retail parks stock, projects of 135,000 sq m are announced for 2018, to settle a new record in terms of annual deliveries, however not all projects are likely to be completed in term.
The report shows the high street sector experienced a slowly growth last year, being stimulated by the overall positive evolution of retail sales and active levels of demand. The most developed high street areas in Romania are found in Brasov, Sibiu, Timisoara, ClujNapoca, Pitesti and Oradea. With few exceptions, the merchandise mix remains dominated by banks, pharmacies, mobile phones operators, casinos, services and supermarkets / proximity stores, coupled with restaurants / coffee shops in the best areas. Bucharest’s old city center continues to be the most effervescent area in terms of investments, with refurbishments, new functions (Hilton Garden Inn) and new openings (Starbucks, KFC), however still not reaching the expected potential.
According to Activ Property Services, IT&C generated 42 percent of office demand in Bucharest, followed by finance & banking sector (15 percent) and consumer goods (10 percent). Demand outside Bucharest has maintained at record levels, being accounted major deals of over 90,000 sq m, most of them as part of the top markets. Timisoara witnessed the largest take-up outside Bucharest for the second consecutive year, with 37,000 sq m of major deals.
2017 was the best year for the Romanian industrial sector, during when the volumes of new deliveries and demand reached record high levels. The industrial and logistics market took advantage of the strong economic growth and jump in retail sales, with increases in both logistics and manufacturing activities. Demand reached an all-time record last year, with the take-up volume increasing by 70 percent nationally. Projects of over 3 million sq m are planned all over Romania, including both extensions and new parks that are ready to break ground upon demand.
Investment volumes jumped by 56.5 percent yoy, to a total of EUR 925.1 million (major deals), being the 3 highest level of the last 10 years. Growth came from a 65 percent increase in retail investments, coupled with the sale of the largest 5-star hotel complex in Bucharest at a record price. Bucharest maintained as the main destination for real-estate investments, concentrating 43 percent of total investments last year. Major investments to reach EUR 1 billion are anticipated for 2018, being expected prime deals to settle new market references.