REAL ESTATE
ROMANIA SEES GROWING PROPERTY INVESTMENT VOLUMES
http://www.business-arena.ro
Last year’s property investment volume in Romania is estimated at nearly one billion euro, representing an increase of around 10 percent from the previous year’s level (890 million euro), according to JLL’s CEE Investment Market H2 2017 report. Thus, Romania’s investment share stood at around right percent of the total 12.17-billion-euro Central & Eastern Europe (CEE) investment figure.
20
While emphasizing that the macro-economic forecast for Romania continues to be positive, the report points out that the country is expected to hold its position as the EU’s top performer, with a 2018 GDP increase forecast of 5.5 percent. Looking at market details, the report points out that the number of transactions increased in 2017, while the average deal size reached around 28.5 million euro. JLL’s report also notes that Bucharest accounted for around 36 percent of the total investment volume, down from 2016, and showing that liquidity in secondary cities has improved. Retail transactions dominated market volumes, taking 43 percent of the total, while industrial, office and hotels accounted for over 22 percent, 17 percent and 18 percent respectively. Last year’s largest transaction was the acquisition of 50 percent of Iulius Group’s retail and office portfolio (Iulius Mall Cluj-Napoca, Iulius Mall Iasi, Iulius Mall Timisoara and Iulius Mall Suceava and three office buildings) by South African group Atterbury. The report listed as the second most important retail transaction the acquisition by Mitiska of a portfolio consisting 11 retail properties and three development projects from Alpha Group, for around 60 million euro. In the office segment, the most important office transaction was the acquisition by Immochan of Coresi Business Park in Brasov from Ascenta Management. Other major transactions include the acquisition of Green Court Building C by Globalworth, from Skanska for 38 million euro and the sale of ART BC to Hili Properties for 30 million euro. In the industrial segment, the acquisition of Logicor’s Romanian portfolio as part of a PanEuropean transaction by China Investment Corporation form Blackstone was the largest deal in 2017. The value of the transaction is estimated at around 78 million euro. Other major deals
included the acquisition of the Renault warehouse in Oarja by Globalworth for 42 million euro. A key transaction was the sale of the Radisson Hospitality Complex in Bucharest by Elbit Imaging, a NASDAQ listed company, to a joint venture between Revetas Capital and Cerberus Capital Management. According to JLL’s report, “the sale represents the largest ever hotel transaction by deal volume in Romania and one of the largest recorded in CEE”. The report highlights the fact that the transaction “not only demonstrates institutional interest in the hotel market, but it shows there is liquidity for large, core real estate assets in the country. Bucharest, the largest city in CEE with excellent economic dynamics, is starting to gain recognition and will attract capital, even when it comes to large single asset deals.” As for yields, the spread between Romania and Poland, Czech Republic and Hungary remains close to or at record levels. The report also notes that liquidity has improved, but is still well below potential due to a “limited availability of quality product for sale in open market processes at realistic pricing expectations. However, the situation looks set to change in 2018 with several large transactions already on the way.” Prime office yields stand at 7.50 percent, prime retail yields at 7.25 percent, while prime industrial yields are at 8.50 percent. In turn, yields for office and retail are unchanged from the year before, while industrial yields contracted by 50 bps over the year. “There is soft downward pressure on yields and in 2018, we may witness limited compression in case prime assets will transact,” the report added. In terms of financing, JLL expects terms and conditions to get closer to what can be expected in the core CEE markets. “Consequently, sentiment is strong, with a total volume for 2018 estimated to break the one-billion-euro mark.”