Commercial property investment amounted to €168 million in H1 2023, roughly half compared to last year, with industrial and logistics accounting for the biggest share of the transaction volumes.
Going forward, several large deals are currently in various stages and if closed could reach €500-€600 million, about half compared to last year’s result.
“The market is currently in a price-discovery mode, with neither buyers nor sellers wanting to be the party that ends up proven wrong by market trends in a few quarters. Hence, the divide between the expectations of buyers and sellers is, for sure, wider than it has been in the recent past. The main sticking points here are, of course, the sharply higher interest rates and, equally important, the uncertainties tied to the path of interest rates going forward. On the more positive side, we continue to see good interest in local assets, including from potential new names, though maybe compared to previous years, fewer of these inquiries move into more advanced phases. We would interpret this as confidence in the country’s longer-term potential coupled with caution regarding the current backdrop,” said Anca Merdescu, Director Investment & Debt Advisory at Colliers.
The year’s biggest deal was the sale-and-leaseback of the FM Logistic warehouses, a 3PL operator, a roughly 100,000 sqm portfolio in multiple cities, purchased by CTP for an estimated value of around €60 million.
In terms of transactional activity, this sole industrial deal accounted for roughly 36% of the year’s volume. Offices also remained an active asset class, attracting deals worth 31% of total volume in H1 2023, retail generated approximately 23% of the turnover and hotels - almost 11%.
“Overall, this is like a breather year as investors and owners take stock of what’s taking place in financial markets. Following the latest round of rate hikes, the ECB, as well as the Fed, seem to be done for the moment. This means that if the expected drop in inflation materializes, and we are seeing some encouraging signs, interest rates could start decreasing late 2023 or early 2024. Meanwhile, the global economy remains sufficiently robust, with advanced economies in decent shape, including European economies, and along with falling inflation the signs are becoming encouraging for the real estate sector as we move beyond this year. Consequently, assuming no major adverse scenario surfaces, 2024 should look better than 2023 for the Romanian investment scene,” added Merdescu.
Across CEE-based markets, the investment volume fell about threefold to €2 billion, while the estimate for the whole year stands at €5 billion.
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