Romania: Real estate investments in 2020, 27% higher than those recorded in the whole 2019

Almost two thirds (62%) of real estate investors confirm interest for acquisitions of new projects, both in Bucharest and regional cities, and are currently ready to buy at more favourable conditions, given the new economic context generated by the Covid-19 epidemics, according to a survey conducted by Colliers International on the investment market among nearly 50 real estate companies representing investment funds, developers, asset managers and banks.

Investors continue to show the most interest in industrial and logistics projects, with optimism increasing since April, when Colliers conducted a similar survey.

The share of respondents stating they want to better understand the situation before making a move has dropped from 67% in April to 30% in October.

Moreover, the percentage of investors ready to ”buy at more favourable conditions” has increased from 23% to 62%.

The share of market participants looking to expand their portfolios both in Bucharest and regional cities far outweighs that of those seeking an exit, according to another positive chart in the report.

Around 57% of respondents with assets/focus in Bucharest are looking for opportunities, as are 32% of respondents with assets in regional cities.

Regarding the financing availability, there are some improvements since the April survey conducted by Colliers, though the majority of investors (55%) still expect a short-term worsening, versus 74% in the April survey.

Meanwhile, investment volumes on the local real estate market reached nearly 820 million euro in Romania in the first three quarters of the year, up by 45% versus 2019’s same period and 27% more than in all 2019, making the best three quarters in the last decade, with office assets accounting over 90% of volumes.

While there is some inertia at play, it is encouraging that the year’s biggest deals – the sale of the NEPI Rockcastle office portfolio for over EUR 300mn to AFI Europe and the sale of Floreasca Park to the Fosun/Zeus JV for over EUR 100mn – were both finalized in August, in spite of the pandemic.[HA1]

A recession with a much swifter recovery

The investors are still looking at a recession with a much swifter recovery than that of 2009, with the real estate segment being resilient against this backdrop.

The main issue on the mind of real estate market participants is the uncertain global economic backdrop (51% of answers), followed by concerns about Romania’s fundamentals, like its fiscal imbalances (40% of answers) and uncertainties about real estate in general (38% of answers). This suggests a fairly difficult backdrop for conducting deals, but it appears that general concerns weigh a bit more than Romania’s specific problems.