Investors and bankers are interested in closing deals in the Romanian commercial property sector and we might see more projects with bigger discounts next year, concluded speakers of the transactions panel of SEE Property Forum 2023, held in Bucharest recently.
Dieter Knittel, Head of CEE, pbb Deutsche Pfandbriefbank, who chaired the panel asked the speakers about the transaction environment in Romania and the asset classes that stand out in the eyes of investors.
There is still room for growth in the Romanian industrial sector, said Andrei Brinzea, Partner, Land & Industrial, Cushman & Wakefield Echinox. He compared Poland’s industrial stock of 28 million sqm at a population of 39.8 million, while Romania has 7 million sqm and a population close to 20 million. Brinzea suggested that in a normal development pace across the years, Romania should reach 15-18 million sqm of industrial spaces.
Romania is far less cheaper compared to other countries in terms of construction prices, but the yields are still very attractive compared to neighbouring countries, according to Catalin Jaloba, Head of Real Estate Finance, BCR. "The debt that was raised has a lot of repayments in 2024 and 2025. Unfortunately, I doubt that more than 20-30% of this debt will be covered by the banks. This means we are going to see a lot of transactions, a lot of properties on the market, and some of them will be discounted by 20-25%. We are going to have new investors and new banks coming to finance. We are three quarters away from a serious discount coming from the ECB, in mid-2024."
Andrei Koszti, Regional Commercial Manager, CTP Romania, said the main focus is to attract new businesses interested in this part of the world. He explained that compared to Poland, Romania still has the emerging attitude and the capability to develop. CTP has a portfolio of 2.7 million sqm in 12 Romanian cities and can provide flexibility for tenants that plan to expand in Western Europe or the Balkans region, according to Koszti.
Codrin Matei, Managing Partner, Head of Capital Markets, Crosspoint Real Estate, said that the time frames are very challenging for transactions, which are added to the high inflation and increased interest rates. He explained that his team worked for six months on a sale and lease-back deal in the industrial segment that was closed in mid-2023. He added that Romania is a market for cash buyers today as a growing number of high-net-worth individuals are looking at real estate as an inflation hedge.
Maxime Otto, Capital Markets, iO Partners said the latest deal completed in Romania was for an office building. He said the deal was challenging due to the expectations of the buyer and seller, but his team was able to bridge the gap through an interesting structuring of the transaction. At present, iO Partners is involved in transactions with a combined value of €500 million, which means there is appetite from the investment and banking sides.
The group is focusing on efforts on markets that are deeper and that have repriced faster, said Florin Tirla, Country Head Romania & Bulgaria, Indotek Group. He explained that it is tougher for the group to find products in Romania compared to Spain, Italy and Poland.
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