Romanian investment market update
With transactions of EUR 386m in the H1 2018, Romanian real estate market was the third largest in CEE, and more active than those of Hungary and Slovakia. In addition, there are a substantial number of transactions in different stages of negotiations that will be concluded during the remainder of 2018 and will push the market to a level of transactions at least comparable to that achieved in 2017, of approx. EUR 1 billion. The average deal size increased, standing at approximately €40 million. Bucharest accounted for over 90% of the total investment volume, and a number of transactions being also recorded in regional cities such as Cluj-Napoca and Brasov. The market was dominated by office transactions – 66% of the total volume, followed by the retail sector – 29%, and hospitality and industrial accounted for the rest. The largest office transaction registered in H1 2018 was the acquisition of Oregon Park.
Selected investment transactions
Q2 2018, Oregon Park – 46,081 sqm – Lion’s Head Investments
Q2 2018, Campus 6 – Skanska/ CA Immo – 22,000 sqm
Q2 2018, UTI Building (Lascar 31) – UTI (Local developer)/ Forevest Capital Partners – 9,250 sqm
Q2 2018, Maestro Office Building, Cluj-Napoca – First Property Group PLC – 10,000 sqm
Q3 2018, The Bridge – Forte Partners/Dedeman – 77,190 sqm
Q3/Q4 2018, The Landmark – Piraeus Bank/ Revetas- 23,644 sqm
Q3 2018, Militari Shopping Center – Atrium/ MAS Real Estate – 56,416 sqm
Q1 2018, Radisson Blu – Elbit Imaging/Cerberus Capital and Revetas Capital – 200 rooms
Downward pressure on yields in each segment has been noticed, with prime office going down to 7%, prime shopping center – to 6.5%, and prime industrial yields – to 8.5%.
Bucharest office market update
New office delivery H1 2018 – Globalworth Campus Ph2/ Dimitrie Pompeiu- Pipera / 28,000 sqm/ Globalworth Developer
Development Pipeline (175,000 sqm office class A)
Orhideea Towers/ West / 37,000 sqm/ CA Immo
The Mark/ CBD / 25,500 sqm / S Immo
Campus 6 Ph 1/ West / 20,000 sqm / Skanska
Globalworth ph 3 / Dimitrie Pompeiu-Pipera / 20,000 sqm / Globalworth
AFI tech Park 1/ West / 22,000 sqm/ AFI Europe
Day Tower/ Central East / 11,753 sqm / DayGroup
Unirii View/ Central / 18,000 sqm / C&I
D’Or / Centre / 5,521 sqm / Primavera Development
Sema Park 5 / West / 15,700 sqm/ sqm River Invest Development
Leasing Transactions Volume – 149,000 sqm office space transacted in H1 2018
- New shared office space tenants are taking an increasing share in the leasing activity
- New entrances in Romania- London Stock Exchange
Vacancy – reached 8% – lowest in recent years
Total Stock – 2.79 million sqm
Bucharest office submarket trends
Bucharest office market is divided in 12 sub-markets out of which the largest are: Floreasca Barbu Vacarescu (16.8% of the total stock), North (13%) and Dimitrie Pompeiu (13%). Bucharest office market landscape is very dynamic, with new clusters under development in the next 3 to 5 years. Besides the traditionally attractive Barbu-Vacarescu and North, Center West, Expozitiei Area and Central Area are emerging as attractive new areas of the office market.
Center-West has all the prerequisites to become the next office hub in Bucharest after Floreasca -Barbu Vacarescu. There are a lot of similarities between these two areas: good access to the airport, excellent public transportation, proximity to a shopping center.
Expozitiei Area – The lands bought in the Piata Presei- Expozitiei area in the last 2 years allows the development of ca. 200,000 sqm of office space. Developers have announced their intention to deliver around 160,000 sqm of office space in the area over the next two years. We have seen already the first leasing contracts signed in this area.
The Center Area – after Nepi’s success to devleop and refurbish a historical Villa at Aviatorilor 8, other developers followed the same steps. Atenor Group bought last year a historical villa and land for Dacia 1 office development. The historical building will be renovated and integrated into the new office project, which will have an area of nearly 12,500 sqm. The company’s representatives have scheduled the completion date for 2020.
Forte Partners acquired “Palatul Telefonelor” (The telecommunication HQ) from Telekom and 1,700 sqm plot of land to transform the site in to a new modern office building (9,000 sqm of prime office). Israeli Developer Hagag purchased two historical buildings on Calea Victoriei for refurbishment into modern offices as well.