Romania’s unprecedented GDP growth rate of 5.7% for the first half of 2017, according to the latest data issued by the Romanian Statistical Institute, was fuelled by record levels of high domestic demand and low unemployment rate. This has created the right economic environment to attract international institutional investors.
Codrin Matei, Managing Partner and Head of Office Agency, Capital Markets and Business Development at Crosspoint Real Estate, comments: “Romania’s achieved an investment volume of over €400m in the first half of 2017. Although it is still behind its competitors in terms of investment appeal in CEE, namely a quarter of Poland’s investment volume (€1.5bn) and an even further stretch behind the Czech Republic (€2bn), the perspectives are promising. The prime office yield in Romania is reported at 7.5%, versus 5.5% in Poland and 4.85% in the Czech Republic.”
Doubling the gross minimum wage as compared to 2011 and tax cuts have boosted the retail sector, which has attracted new comers to the market. Investors have targeted the retail and industrial portfolios, with record transactions ranging between €40m and €100m, coming from South Africa, China and Belgium, while Globalworth, Romania’s largest investor, has diversified its portfolio with new industrial assets. Although there is interest from investors in all sectors, there is still a lack of quality products for investment in the office market.
The largest office transaction recorded in Q1 was the acquisition of the Polona 68 building by Smartown Investments in a deal worth over €15 million. In Q2, ArtGroup Business Center was bought by the Maltese group Hili Properties in a €30m transaction.
Overall, the Romanian real estate market is improving with a growing interest from new players hence Crosspoint expects an increase in liquidity and volumes.