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Real estate: Real estate market continues to grow. International investors and developers interested in Romania
The local real estate market will continue its positive evolution. Increases are estimated in key-segments such as investments, office and industrial markets, according to the latest market report of a real estate consulting company.
“Compared to the other Central and East European countries, Romania enjoys a healthy domestic demand and there are concrete signs showing that the country’s attractiveness is growing. International investors and developers are trying to capture the potential of the market in a short period of time. You grow, adapt or disappear, this is the present spirit of the real estate market. There is a large number of projects announced in all sectors, but the competition will be won by he who aligns quicker to market tendencies and demands”, considers Ilinca Paun, Managing Director Colliers International Romania.
The investment market was the star segment in 2015, being the first post-crisis year when transaction activities really indicated the revival of the sector. The office segment was dominated by the outsourcing one, by new companies or the expansion of the already existing ones, attracted by local market opportunities. The favorable macroeconomic situation backs the positive feeling of the real estate market. Salary increases by 8.4% and consumption increases by 4.7% compared to 2014, were reflected by better retailer performances, according to the report published by Colliers International Romania.
Over 360,000 square meters of offices will be delivered in 2016 and the interest in market potential is confirmed by the high number of pre-renting contracts already signed, which is more than half the stock to be delivered.
In 2016 we will see more average size transactions with small areas between 3,000 and 5,000 square meters, compared to 2015 when several transactions were remarked.
“The outsourcing sector will be the main demand generator for offices in 2016. The most important aspect of this increase is broadening the interest spectrum for Romania. The main attraction is not just for costs, but rather for the value and quality of services delivered. We expect a healthy demand supported by new office areas in the next years,” the study shows.
The retail market has reported a growing effervescence in the last two years, encouraged by the positive economic context and by salary raises. For 2016, new deliveries of commercial centres are announced in Bucharest and other cities in the country. According to report estimates, the commercial centre stock in Romania will grow by 500,000 square meters by 2020. Among larger cities, Timisoara is one of the most active, following the good results recorded by retailers already present in the market, so that the city will face a excess of 50,000 square meters of non-food retails which it will have to absorb in the years to come.
The industrial market continued the anticipated growth cycle, being doubled by changes of existing stock. New projects to be completed this year started being developed in Bucharest for the first time in the last years. 100,000 sq.m will be added to 941,000 sq.m existing at the end of the previous year. The consolidation of the industrial sector expands outside the Capital, while the west of the country is the next concentration of industrial type projects in cities like Timisoara and Cluj Napoca.
For 2016, we expect a market with investments similar to the ones recorded in 2015. Romania is still offering an attractive level of profitability compared to the rest of markets in the area. The cost of financing is significantly higher than in Central and Western Europe, but the dropping trend has already started increasing Romania’s competitiveness for investments, the report shows.