Industrial Market – South Region 2016
For the first 9 months of 2017, the property investment volume for Romania is estimated at €610 million, a value almost 44% higher than the one
registered in the same period of 2016 (€423 million). The number of transactions increased, with the average deal size standing at approximately €25.3 million.
Bucharest accounted for just over 25% of the total investment volume, less than in the same period of 2016, showing that liquidity in secondary cities has significantly improved. Market volumes were dominated by retail transactions (60%), while deals involving office buildings reached close to 25%, the remainder being represented by industrial and hotel assets. The largest transaction registered in first 9 months of 2017 was the acquisition of 50% of Iulius Group’s retail and office portfolio (Iulius Mall Cluj-Napoca, Iulius Mall Iasi, Iulius Mall Timisoara and Iulius Mall Suceava and 3 office buildings) by South African group Atterbury. This is the first acquisition of the fund in Romania, buying shares in one of the largest retail owners in the country. The most notable office transaction was the acquisition of Coresi Business Park by Immochan from Ascenta Management for around €50 million. This marked the entrance to the office market for the investor/developer who had been previously focused on retail projects. In industrial, the largest deal was the acquisition of the Renault Warehouse Oarja by Globalworth, for approximately €42 million.
The macro-economic forecast for Romania is positive. The country was the EU’s top performer in the first half of 2017 (with GDP growth estimated at 5.8%) and is expected to hold this position throughout the rest of the year, with a GDP increase forecasted at 5.3%. Liquidity improved over the past year as there is still significant yield spread between Romania and Poland or the Czech Republic. However, the availability of quality product is still relatively low, but improving. On the financing side, terms and conditions have improved significantly over the past year getting closer to what can be expected in the core CEE markets. Consequently, sentiment is strong, with total volumes for 2017 estimated to reach close to €1 billion.
Prime office yields are at 7.5%, prime retail yields are at 7.25%, while prime industrial yields are at 8.5%. Yields for office and retail are at the same level as 12 months ago, while industrial yields have compressed by 50 bps over the year. There is soft downward pressure on yields and in 2017 so we may witness further compression in case prime assets will transact.