Demand improved during Q2, while deliveries are limited and vacancy rates keep decreasing according to the Bucharest City Report for Q2 2022, published by real estate consulting company JLL.
The property investment volume for Romania in Q2 2022 is estimated at approximately EUR 257.4 million, a value almost 4 times higher than the one registered in Q1 2022 and 13% over Q2 2021. For the first 6 months of 2022, total investment volumes reached EUR 326 million, almost the same as in H1 2021.
It is expected investment volumes in 2022 to reach approximately EUR 1 bln., although accurate predictions continue to be challenging to make in this period due to market uncertainties.
The largest investment deal closed in Q2 2022 was the sale of Expo Business Park office complex, developed by Portland Trust, to S Immo. Prime yields in Q2 2022 were stable, at 6.75% for offices, 7.25% for retail, and 7.50% for industrial properties.
Demand is improving on the office market
Overall, H1 2022 marked a slight 10% increase in gross demand in Bucharest compared to H1 2021, to 134,600 sq m. However, net take-up increased to 82,300 sq m during the period, 70% over H1 2021.
As expected, the vacancy rate contracted during Q2 2022, from 14.3% in the previous quarter to 12.75%, since the volume of new deliveries was low during the period. The hybrid approach is still common practice.
Only one office building was delivered in Bucharest during Q2 2022, the second phase of the AFI Tech project, that adds 24,500 sq m to the Center-West submarket.
Until the end of 2022, approximately 41,300 sq m are expected to be added to the market, bringing total deliveries for the year to 139,300 sq m. The largest project expected to be completed by the end of 2022 is the second phase of One Cotroceni Park.
Q2 2022 marked an increase of the prime office rent in Bucharest, from €18.5 per sq m per month, to €19.0 per sq m per month, as a direct consequence of rising inflation, and construction costs, combined with a small volume of new deliveries.
Over 150,000 sq m to be added the retail stock by the end of 2022
In May 2022, retail sales increased by 6.2% y-o-y after the state of alert and all pandemic restrictions were lifted on March 9th, which represent an encouraging evolution for the market.
During Q2 2022, only 16,800 sq m were completed in two major retail schemes, both in regional cities. This is, however, 40% above the modest deliveries in Q2 2021.
Supply is expected to pick up during the second half of the year, adding over 150,000 sq m to the modern stock. Overall, the volume of new deliveries in 2022 could reach 184,100 sq m, 73% over 2021, concentrated mainly in retail parks in medium and smaller cities.
Industrial stock expected to reach over 6.3 million sq m this year
The Industrial market in Romania continued to perform very well during Q2 2022, gross demand reaching 188,400 sq m, 34% below the previous quarter, but 40% above Q2 2021.
For H1 2022, gross take up totaled 472,700 sq m, 19% above H1 2021. Net take up was 386,900 sq m, 37% more compared to H1 2021.
During Q2 2022, approx. 92,700 sq m of industrial and logistics spaces were delivered in Romania. For the second half of 2022, developers plan to deliver another 424,000 sq m of industrial and logistics spaces. This would bring total completions for 2022 to 672,100 sq m, 27% over deliveries in 2021.
Due to strong demand in H1 2022, vacancy rates continued to slightly decrease at the national level, from 2.8% in Q1 2022, to 2.6% in Q2 2022.
First signs of slowdown on the residential market
The level of new units transactions in Q2 2022 was situated somewhere at 8,350 units for Bucharest and 1,450 units for Ilfov, 3.8% increase as compared to the previous quarter.
Overall, the second quarter of the year marked a 16% increase as compared to Q2 2021 and a spectacular increase as compared to Q2 2020, with a double volume of registered transactions.
The residential supply for Bucharest – Ilfov increased with approximately 6,250 new units in Q2 2022, out of which 3,460 new units in Bucharest and 2,790 new units in Ilfov County. By the end of the year, we estimate a total supply of 17,925 units for Bucharest and Ilfov.
Residential prices registered a 4% increase in Q2 2022 as compared to the previous quarter, levelling at an average of EUR 1,720 / sq m.
