Industrial Market – South Region 2019
The Q1 2019 property investment volume for Romania is estimated at circa €119.5 million, a value almost three times the one registered in the same period of 2018 (€44 million). Moreover, there are a number of transactions in different stages of negotiations that will most likely be concluded during the remainder of 2019. In comparison with Q1 2018, the number of transactions decreased, however, the average deal size increased, standing at approximately €40 million. Bucharest accounted for less than 4% of the total investment volume, mainly due to a very large retail portfolio transaction that closed during Q1 in various regional cities. Market volumes were dominated by retail transactions (almost 95%), while office accounted for less than 4%.
The largest transaction registered in the first quarter of 2019 was the acquisition of a retail portfolio, comprising 9 shoppingcenters totalling68,000 sqm in the regional cities of Romania by MAS Real Estate. This is the third direct real estate transaction of the South African investment fund after the acquisition of MilitariShopping and Atrium Mall Arad last year.
The macro-economic forecast for Romania continues to be positive, despite some recent concerns. On the financing side, terms and conditions are getting closer to what can be expected in the core CEE markets. Consequently, sentiment is strong, with a total volume for 2019 estimated to surpass to the €1.1 billion mark.
Prime office yields are at 7.25%, prime retail yields at 7.0%, while prime industrial yields are at 8.25%. Yields for retail areat the same level as 12 months ago, while office and industrial yields have compressed by 25 bps over the year. There is a very softdownward pressure on yields, however, in 2019 we do not expect any compression due to the lack of prime product transactions.