“Covid-19 was a black swan event that has had a significant impact on the real estate investment market. But investors eventually regained faith and came to realize that matters would return to normality. We witnessed amongst others a new entry on the Romanian market, an important portfolio expansion from a major player such as S IMMO and we saw some creative deals across all market sectors”, stated Gijs Klomp, Head of Investment Properties, CBRE Romania.
The study shows Romania’s total investment volume ended 2020 with €588.5 million, a value almost half of the one registered in the recent record year 2019 but similar with 2015, a year when the marked resumed growth following the GFC. Although 68% of the total investment volume was transacted during the first six months, the second half of the year witnessed the largest transaction of 2020, marking the entrance on the Romanian market of a new Chinese investor. Fosun acquired Floreasca Park office building in Bucharest for €101.5 million thus reconfirming the attractiveness of the Bucharest office investment market.
Also in 2020, the biggest investment deal negotiated in 2019 was finalised when AFI Europe completed the transaction process with NEPI Rockcastle* for three office buildings in Bucharest (Floreasca Business Park, The Lakeview, and Aviatorilor 8) and one in Timisoara (City Business Park) for an estimated total volume of €308 million. 2020 ended auspiciously for the office investment market as S IMMO, advised by CBRE, agreed the transactional terms for a forward purchase of the Campus 6.2 and 6.3 office buildings, for approximately €97 million.
Cautious optimism for 2021 According to CBRE, forecasts for 2021 remain cautiously positive as a number of transactions were signed in 2020 and will close in 2021 and several other transactions are in various stages of negotiation. Investors continue to pursue opportunities in the industrial sector, but available product remains very limited. The retail sector, especially certain subsegments which are deemed more defensive, continues to attract interest and some transactions may materialize in this sector as well.
The Romanian property investment market is likely to continue to benefit from foreign investor demand. Investors are still facing challenges in deploying equity as supply of capital exceeds investment opportunities across the globe. Competition for core assets in other CEE markets furthermore remains fierce, which is an indication that Romania will remain on the investors’ radar.
“One should not forget that supply of core investment product in Romania remains very low especially the industrial sector is characterized by a chronical shortage of investment product supply paired with high (latent) demand. The combination of limited supply and better than envisaged demand may very well trigger surprising movements in pricing in 2021”, highlighted Gijs Klomp.
Based on CBRE recent survey, Romanian Investment Sentiment Survey, no matter the type of property, location remains one of the main criteria for investors when choosing what should be added to their portfolio. The same survey revealed that offices remain the most sought-after product by investors, but also highlighted an increase in interest for the Industrial sector in terms of future investments.
In Europe, commercial real estate investment volumes reached €275 billion in 2020, which represents a 17% decrease from €331 billion in 2019, a better performance than was initially anticipated considering the Covid-19 pandemic, according to CBRE.
*CBRE booked the NEPI Rockcastle portfolio sale in 2019 based on the binding SPA that was signed between the parties. If that transaction, which eventually closed in 2020, would have been booked in 2020, then transaction volumes in 2020 would have amounted to €897 million representing an increase by 22% versus 2019. (source: CBRE)
