Industrial real estate investments register record level in Romania. See the potential on office, retail

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The total investment volume for 2015 was of EUR 678 million, with foreign investors continuing to dominate the local market and with local capital accounting for less than 3% of the total investment volume. The industrial sector fuelled by two major investors, registered a record investment figure of EUR 389 million, representing 57% of the total amount, reads a CBRE survey on local real estate and investment market.

Top five investment transactions recorded in 2015 account for 60% of the total investment volume, all of them located in Bucharest.

The biggest top five real estate transactions in 2015 were: Europolis Logistic Park acquisition by P3, Floreasca Park acquisition by GLL, Auchan Titan Shopping Center acquisition by NEPI, Bucharest West acquisition by CTP and Green Court Bucharest Building B acquisition by Globalworth.

Despite the decline of the investment volume in Romania in 2015 (down by 42% compared to 2014), foreign investors continue to dominate the local market.

The CRBE survey reads that the Netherlands, USA, Great Britain and Germany are the countries which have invested the most in Romania last year.

Some of them are new entries (Logicor, First Property Group, CTP, P3, Lone Star), while other consolidated their businesses (CA IMMO, WDP, Globalworth, Carrefour Property Division, Secure Property Development & Investment).

In 2015 the highest level of investment was registered for the industrial sector with a record figure of EUR 389 million, mainly to two major players that have entered the local market and started investing here (P3 Logistic Parks and CTP).

“If we look at the investors’ interest, we can estimate that 2016 will have at least the same performance indicators as in 2015. Both active investors in Romania and also the ones intending invest on the local market are getting more and more receptive to strengthen their presence in Romania, considering the latest solid performances of the Romanian economy but also due to the convenient costs of the investment products. At the same time, the grants offered by the banking system contributed to the yields’ improvement in the last year,” Gijs Klomp, Head of Capital Markets CEE, CBRE argued.

According to the survey, prime yields have compressed during the past 12 months from 8% to 7.25% for shopping centers, from 7.75% to 7.5% for offices and from 9.5% to 8.75% for industrial.

The yield compression will be seen during 2016 also perhaps with a slightly lower margin. It should be taken into account the fact that Romania has not yet reached the levels from Czech Republic, Hungary and Poland yet, but it is on the right track.

Taking into account the investment volumes transacted during the past two years it is likely that 2016 will at least match the results from 2015, the survey’s authors forecast.

The growth scenario might include transactions with residential properties (none significant in 2015, but consistent in 2014), hotels, but also office and retail assets. The industrial sector will probably slow down as a significant part of the available stock was traded in 2015. The number of foreign investors is higher than two years ago and it is expected that new investors will increasingly target Romania on the back of the strong economic performance and the comparatively attractive pricing, reads the survey’s conclusion.

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