The Romanian investment market closed the first quarter in 2021 with transactions worth 85 million euros, 42% less than in the first three months of 2020
The first quarter of 2021 ended with a total value of investment transactions of 85 million euros in Romania, a decrease of around 42% compared to the first three months of 2020, in a context not yet significantly impacted by the Covid-19 pandemic, with office assets representing around 50% of volumes, reveals Colliers in its latest “Investment scene CEE Q1 2021“report. Despite a slow start, investor sentiment points to a strong recovery in activity in the second half of the year, subject to progress in the pandemic and open travel.
Overall, investment flows in Central and Eastern Europe (CEECs) are down nearly 48% compared to the first quarter of 2020, to around € 2 billion. Poland remained the leader in the region, with investment volumes representing 65% of the overall EEC6 total, followed by the Czech Republic and Hungary, with 14% and 11% respectively.
The office sector was dominant across the region in the first quarter of 2021 in terms of transactional activity, with a 50% share of total investment volume, followed by industrial and logistics spaces which are rising sharply as investors diversify into this Covid-proof Sector (28%) and far from the most difficult sectors of retail and hospitality (15%).
“This is well applicable to the Romanian market where we have a volume of around 40 million euros intended for the office segment via Bucharest Financial Plaza and a 2,500 square meter office building in Brasov has entered into agreements, which represents approximately 50% of the total for the first quarter of 2021. transaction volume. A rather unexpected share of around 25% went to the hotel segment through Ramada Majestic and the Opera, Central and Venezia portfolio, marking two entries of new investors in the local market and bringing back the interest of the hotel market and the recovery soon. expected of this segment. In Romania. The remaining share went roughly equally to retail and industrial and logistics assets through the Lidl portfolio and Solo Iasi transactions. Around 30% of investors were represented by domestic investors, a figure that is still balanced for the investor pool in Romania, ”explains Anca Merdescu, associate director of investment services at Colliers.
In addition, Colliers Consultants are noticing an increased interest in real estate from a variety of investors, even those who are not necessarily specialized, but who are looking to diversify their asset classes. The key criteria for such interest are undoubtedly long-term leases, over 10 years, and a financially sound tenant behind. These investment opportunities are highly valued and have great potential to trigger a compression of returns.
Bucharest has one of the highest returns in the region for the office sector (7%), compared to at most 4.25% in Prague, 4.70% in Warsaw or 5.25% in Budapest. In the future, rents will remain relatively stable, according to Colliers International in its latest “CEE Q1 2021 Investment Scene”, with a flagship title still around 18 euros per square meter in the office sector in Bucharest (and an average around 14 euros per square meter), respectively between 11 and 14.5 euros per square meter in the other centers of the country.
“The second quarter is already proving to be a lot busier, with several big contracts underway and great progress behind the scenes. The biggest deal of its kind is the sale of Hermes Business Campus by Belgian developer Atenor to Hungarian investor Adventum for more than 140 million euros, but this remains to be finalized. Several industrial assets purchased by CTP and Globalworth totaled 40 million euros, with the transaction of The Light office project in Bucharest, from Romanian River Development to Uniqa, adding around 50 million additional euros, ”says Austrian Anca Merdescu, Associate Director of Investment Services at Colliers.
In Central and Eastern Europe (EEC), Colliers’ consultants estimate that end-of-year EEC 2021 volumes will accelerate to reach similar levels until 2020, of around 10 billion euros. . EMEA preliminary volumes are estimated to be down around 32% year-on-year. The industrial and logistics sector continues to thrive with declining returns in almost all markets and premiums paid for portfolios, notes Colliers in its latest Market Overview EMEA Capital Markets Q1 2021. Investors are poised to move up the risk curve in this sector, although some investors are showing initial concerns about prices and whether developers will push rents far enough in an environment of declining cap rates.