Investors in Romania

BUCHAREST (Romania), January 18 (SeeNews) - Property investment in Romania jumped by 35% to 890 million euro ($949 million) in 2016 and developers have a strong pipeline for 2017, property and investment management services provider Jones Lang LaSalle (JLL) said on Wednesday.

The number of transactions in Romania was slightly smaller in 2016, meaning that the average deal size increased, JLL said in a press release. Romania's capital Bucharest accounted for over 70% of the total investment volume, less than in 2015, showing that liquidity in secondary cities has somewhat improved, JLL added. Market volumes were dominated by office transactions (45%), while retail and industrial accounted for close to 26% each. The largest transaction registered in 2016 was the acquisition of 26.88% of real estate investment company Globalworth shares by South African group Growthpoint for approximately 186 million euro. Globalworth is the largest owner of office space in Romania. The most notable retail transaction was the acquisition of Sibiu Shopping City by Bucharest-listed real estate investment fund New Europe Property Investments NEPI from ARGO for a total of 100 million euro, which represents the largest single asset deal outside of Bucharest since the economic crisis. In industrial, the largest deal was the acquisition of P3 Logistic Parks by GIC, the Singapore sovereign wealth fund, through the pan-European acquisition of P3. 

2016 also marked the entry of several new names on the Romanian real estate market, either through the purchase of regional platforms or, individual assets.

Among them Logicor (Blackstone’s European industrial division), GIC, PPF and Growthpoint. ”Market fundamentals remain robust. The macro-economic forecast for Romania is positive. The country was the EU’s top performer in 2016, with GDP growth estimated at 4.8% and is expected to hold this position in 2017 as well, despite a minor slowdown. Occupier demand is at record high levels in all market segments. Availability of quality product is increasing and there is significant yield spread between Romania and Poland or the Czech Republic," national director and head of capital markets for JLL Silvana Petre Badea said. On the financing side, terms and conditions have improved significantly over the past year getting closer to what can be expected in the core CEE markets, she added. "Consequently, sentiment is strong, with transactions of approximately 630 million euro in different stages of negotiation." 

Prime office yields are at 7.5%, prime retail yields at 7.25%, while prime industrial yields are at 9.00%, JLL data showed.

”Yields for office and industrial are at the same level as 12 months ago, while retail yields have compressed by 25 bps over the year. However, there is downward pressure on yields and in 2017 significant compression in industrial and mild compression in offices and retail is likely”, adds Silviana Petre Badea. In 2015, property investment in Romania halved to 663 million euro. In Central and Eastern Europe (CEE), property investment jumped 42% on the year to 12.56 billion euro in 2016 - the third highest CEE regional investment volume since 2007, JLL said in a wider report, CEE Investment Market Pulse. JLL said its forecast for property investment in the CEE region in 2017 remains positive, provided that the supply of product can match the strong levels of demand.

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