The investment volume in the first half of 2018 amounted to approximately 386 million euros in Romania, down 27% from the same period of the previous year, when the investment market reached a value of 530 million euros, according to Cushman & Wakefield Echinox calculations and estimates. This decline comes amid a substantial number of transactions that had not been fully completed by June 30, while their eventual closure in the second half of the year will push the market to a level of transactions comparable to that achieved in 2017, of almost 1 billion euros.
At Central and Eastern Europe (CEE) level, the local market attracted 7.6% of the total investment volume of 5.1 billion euros recorded in 5 countries: Poland, the Czech Republic, Slovakia, Hungary and Romania. The first place was occupied by Poland (3.2 billion euros, with a share of 64.1%), with the Czech Republic standing at 910 million (18%). Romania ranked third in CEE, with a higher market share than Hungary (7%) and Slovakia (3.3%).
At the local level, the most active sector was the office one with a share of 66% of the total volume, followed by the retail sector (29%), while the contribution of the hospitality and industrial sectors was low (3% and 1% respectively).
In terms of location, 93% of the investment volume was generated by property transactions in Bucharest, with a number of transactions being also recorded in regional cities such as Cluj-Napoca and Brasov.
“Following a long period during which new investors have monitored and considered investing in Romania, by analyzing possible investments opportunities, the last months of 2017 and the first half of 2018 saw evidence of this new capital transacting. This trend will continue during the second half of the year, with more news of newcomers to the Romanian market set to be announced in the months ahead. As yields continue to drop in the more developed markets of CEE, Romania will see a natural tendency for investors to look more towards East for higher returns, under the conditions of an acceptable market risk. In this context, Romania represents an attractive solution. Investment volumes are important, but we consider that, on the long run, the diversity of investors entering the market will be even more important,” said Tim Wilkinson, Partner, Capital Markets, C&W Echinox.
The largest transaction in terms of value was completed by Lion’s Head Investments, a joint venture between Old Mutual and AG Capital South Africa, which acquired Oregon Park with surface of 70,000 square meters GLA in the Barbu Vacarescu – Floreasca area. This transaction represents a new record for the local market, being the largest one in the office sector, as well as the first concluded by Old Mutual in Romania, consolidating the position of South African investors on the local real estate market.
Moreover, the sale of The Bridge project in the Orhideea area has recently been announced, a transaction that once completed will set a new price benchmark.
CA Immo also acquired the Skanska Campus 6.1 office building for 53 million euros, the first transaction made by CA Immo in Romania after almost 10 years.
In regards to retail, the most relevant transaction was the acquisition of Militari Shopping Park in Bucharest by another group of South African investors – Prime Capital and MAS Real Estate for 95 million euros.
Cushman & Wakefield Echinox is a top real estate consulting firm on the local market, active on real estate market sectors. The firm’s Capital Markets department was involved in Romanian real estate transactions of over 300 million euros in 2017.