Crosspoint Real Estate has issued its latest market snapshot- Romanian Real Estate Market Q1 2020, an in-depth analysis of the investment, office and industrial markets.
The European Commission’s forecast for 2020 and 2021 put Romania on the top fastest growing economies in the EU. For the time being, the uncertainty surrounding the global and local economy makes it nearly impossible to assess the magnitude of the impact, but both optimistic and pessimistic scenarios indicate a serious decline in 2020, up to a negative growth, at least for the first half of the year.
With a transactional volume in the first quarter of 2020 of around 120 M EUR, the Romanian investment market had a similar start to 2019, when the total volume registered in Q1 stood at 117.5 M EUR. This is however a result of momentum, because the largest transactions have been already initiated last year.
13 new projects have been announced for delivery in 2020, adding 257,000 sqm to the stock. In light of the recent events, deliveries might be delayed or postponed until a more stable environment will allow the market to bounce back. 75,500 sqm of new office space in four buildings have been added to Bucharest’s stock in the first quarter of 2020: Ana Tower (33,000 sqm), Globalworth Campus C (32,000 sqm), H Victoriei 109 (6,000 sqm) and Mendeleev 5 Office (4,500 sqm).The current office stock in Bucharest stands at over 3.2 million sqm.
The IT&C and Finance/Banking/Insurance sectors are still the main sources of demand for office spaces (74% in the total leasing activity). Office spaces in the West/Central-West and Central areas were the most sought after in Q1 2020.
Romania’s industrial stock currently stands at around 4.7 million sqm. Over 85,000 sqm of new industrial space have been delivered in 2020, mainly in the capital city. Bucharest continues to be the largest market, with a stock of a little over 2 million sqm (50%), with the West and North-West areas accounting for 40% of the total stock.
The industrial leasing activity in Q1 2020 amounted to around 67,000 sqm, with a 60%-40% split between Bucharest and the western area of the country.Prime industrial rents have remained unchanged from last year, 3.8-4.0 EUR/sqm/month in Bucharest and 3.5 EUR/sqm/month in the major regional cities.
Industrial vacancy rates remain low. Nationwide, the vacancy rate is around 6.5%, while in Bucharest the vacancy rate reached a little under 8%.
The industrial and logistics market will be less affected compared to the other real estate segments. However, the dynamics will be lower by the end of the year. Some companies delay their expansion but there are signals in the market which show that there are positively affected industries, especially those related to e-commerce and couriers. In addition, there are no large projects built speculatively and the vacancy rate registers lower levels.