Commercial real estate transactions in Romania amounting to more than €600 million are currently under negotiation. Around half of assets in ongoing talks are based in Bucharest, according to a Cushman & Wakefield Echinox report.
Ongoing advanced negotiations target office buildings (30% of the value above), retail projects (30%) and logistics parks (40%). If closed in H1 2024, the total volume of deals could exceed last year’s full result of €488 million.
The increasing financing costs and the investors' reluctance towards the office sector, which had been the preferred asset class during the previous 5 years, have significantly impacted the investment activity. As a result, transactions with office buildings represented only 19% of the 2023 volume, compared with a contribution of more than 60% in the 2018-2022 period.
"After a 5-year period (2018 - 2022) in which the investment volume related to office buildings in Romania amounted to almost €3 billion (around €600 million yearly on average), only €94 million worth of transactions were concluded in 2023, the lowest level of the last 15 years. However, if take into account the gradual return of the office utilisation rates to around 70% of the pre-pandemic benchmarks, the limited pipeline and the total 2023 take-up volume of nearly 500,000 sqm (an all – time annual market record), we expect investors to renew their interest towards this asset class," said Cristi Moga, Head of Capital Markets at Cushman & Wakefield Echinox.
The total transaction volume at regional level reached €5.02 billion in 2023, down 55% compared with 2022.
The biggest transaction concluded in 2023 was Mitiska REIM’s disposal of its retail park portfolio in Romania to the M Core British investment group for €219 million.
The prime yields have seen upward movements across all segments, due to the increasing financing costs, in line with the trends registered across Europe, as the office and retail ones each recorded 50 bp annual spikes, with a lower 25 bp rise for industrial & logistics assets.
The agency’s consultants point out the highly anticipated interest rate cuts in the coming months are expected to contribute to a yield stabilisation throughout 2024 in Romania.
