Experts of the international investors’ panel at SEE Property Forum 2020, a hybrid event organised by Property Forum and RICS, agreed that Romania’s property investment market has matured a lot in recent years but the lack of liquidity is still an issue. They also confirmed that COVID-19 makes it difficult to forecast the future direction of the market and it makes certain market players, especially banks, more cautious.
A cautious approach
Panellists agreed that banks are now in a completely different situation than they were during the 2008 crisis. According to Victor Constantinescu (Kinstellar), the market is more mature and international investors have noticed that. At the same time, it is unfortunately impossible to predict what impact the pandemic situation will have on Romania’s real estate market and currently internal influences have less of an effect on the market than external forces and events.
Hedwig Höfler (CA Immo) confirmed that investor appetite remains strong despite the fact that there is some shift in yields, adding that it is more difficult to obtain financing in Romania than in other countries which is why investors may be more cautious. Panellists highlighted that luckily there are other ways of obtaining financing, such as bond issuance, although CA Immo, for example, sees that as a possible solution in Germany rather than on the Romanian market. Krisztián Hornok (Indotek Group) mentioned the Central Bank of Hungary’s Funding for Growth scheme as an alternative for real estate investment financing, adding that Indotek Group hasn’t made use of this opportunity yet as it managed to move forward using its own liquidity.
Not all tenants are struggling
On the rental market, be it office or retail, the situation is still not easy. Ricardo Rodrigues (Sonae Sierra) explained that they are in constant contact with tenants, but for now, it is not yet clear whether these talks will result in the termination of certain lease agreements or the renegotiation of spatial configurations. In shopping centres, the main goal is to help tenants keep up their sales volumes and to help them reach customers through various means. People are still looking to shop but they want to be as safe as possible when visiting stores and spend only the necessary amount of time in the store. Retail landlords can actually help tenants maintain their sales by investing in online solutions that make it possible for visitors to shop fast and safely.
Krisztián Hornok added that it may be worth differentiating between certain tenants and continuing the negotiations accordingly. Some have been very adversely affected by the pandemic, some are doing okay, but others, for example, pharmacies, have actually benefited from the current situation. Commenting on the other asset classes in the company’s portfolio, Hornok added that yields on the well-performing logistics market are now actually lower than in the case of shopping centres.
What can we expect in 2021?
According to David Hay (ADD Value Management), ongoing transactions will be completed, but we shouldn’t expect the announcement of new major deals in Romania over the next 12 months. Hedwig Höfler confirmed that CA Immo’s ongoing projects on the Romanian market will be completed, but going forward they will dedicate more attention to more liquid regional markets, such as Prague, Vienna, Warsaw or German cities.
