Romania's banking sector has a relatively low exposure to the commercial real estate (CRE) market, indicating stability and significant growth potential, according to an analysis by Cushman & Wakefield Echinox.
Romania's banking sector's exposure to construction and real estate companies is 21%, which is among the lowest in Europe and CEE. This contrasts with higher levels in countries like the Czech Republic (35%), Poland (24%), and Hungary (22%), and significantly higher figures in Nordic countries.
At the same time, the banking sector’s exposure to the CRE market (excluding residential) exceeded RON 100 billion (€20 billion) in September 2024. This accounts for half of the sector's total exposure to non-financial corporations.
Approximately 60% of these loans are secured by real estate assets, with the remainder representing direct exposure to companies within the sector.
In 2024, direct bank exposure increased by 10%, while indirect exposure rose by 6%.
Vlad Săftoiu, Head of Research at Cushman & Wakefield Echinox, said: "This exposure, among the lowest in Europe, suggests a significant potential for growth and development, offering room for investments and innovation in the real estate market without overburdening the banking system.
The steady increase in lending within this sector illustrates growing confidence and a strong appetite for commercial properties, promising a dynamic future for Romania’s real estate market."
The report also indicates that the quality of the CRE loan portfolio has improved in recent years. The ratio of non-performing loans for construction and real estate companies was 4.3% in September 2024, a decrease from previous years.
Additionally, 86% of CRE loans have a debt service coverage ratio above 2, demonstrating that borrowing companies can comfortably cover their annual debt service payments.
