Real estate market players in Romania could face new challenges if the current inflation pressures spill into the next years, said executives during an expert panel discussion that marked the launch of Property Forum’s first annual “The 50 Most Influential People on Romania’s Real Estate Market” publication.
The significant increase in construction materials prices is putting pressure on development costs and this could generate higher risks for investors. Guest speakers concluded that Romania’s economic recovery will provide an impetus for the property industry, but developers should hedge risks stemming from inflation and higher associated costs.
There seems to be plenty of money around equity, debt and this is causing concerns about inflation, said Tim Wilkinson, Partner, Capital Markets, Romania at Cushman & Wakefield Echinox and Chairman of RICS in Romania.
According to Radu Boitan, Senior Partner and Head of Investments at Revetas Capital, asset inflation is something that Romania has seen before and it has to be analyzed carefully. Emerging markets are more interesting today, so we are seeing a rush of capital from mature markets to emerging ones for better returns, he added.
Ana Dumitrache, Country Head Romania at CTP pointed out that the industrial developer is trying to keep financing costs under control and secure funding in the long term. She commented that the inflation is not coming only from consumption size, but also due to an excess of liquidity that has to be spent.
The years 2022-2023 will be critical if inflation becomes a trend. This year, it could be just a spike, everyone tries to recover lost profits so prices went up a little, mentioned Romulus Andrei, Director of Banca Transilvania.
Tinu Sebeșanu, CEO of Impact Developer & Contractor said that the demand for residential units is shifting towards bigger sizes, such as 2-room and 3-room apartments. In Iași, the company is seeing increased demand for residential rent options and more investors are turning to real estate. Impact has kicked off the construction of its first residential complex in Iași. Also, Impact is working with several contractors for its residential projects and is negotiating ways to manage the cost spike of construction materials.
