The New Normal - Market Pulse Report, Romania

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Editorial Supplement, June 2020, Logistics & Office

THE NEW NORMAL

MARKET PULSE REPORT, ROMANIA

ESSENTIAL MEASURES A property market tour, including major cities, with projects status and updated opportunities at the end of the lockdown. Essential news with the status of further investments, clients and partners relations, new priorities for S2 and 2021.

We believe a lot in the Romanian market - Didier Balcaen, Co-Founder and Partner, Speedwell.

WDP eyes the next level opportunities - Dana Bordei, Commercial Director, WDP.

The opportunity to adapt to client’s needs - Jonathan Diamantino, CEO of Zacaria Group.

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Summary

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GLOBAL TRENDS The world is changing

NEW IDEAS Tests for our adaptability

LESSONS AT THE ANNIVERSARY The first 15 years… 51

18-19

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TIMISOARA IN THE SPOTLIGHT Business competitive edge

A FORCE IN THE REGION Together we can be stronger

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PLANS OF THE LEADER We are committed to overcome this crisis

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PRIORITIES AND TRENDS We are all in the same storm 3

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expert guest

WHAT NEXT FOR LOGISTICS The past two months have been the strangest of times in my 39 years of working in the logistic real estate market. Drive anywhere in Romania during these past two months and 90% of the traffic has been lorries.

We don’t normally notice these huge gargantuan creatures that snail their way across Romania and Europe, but whilst we have all been in lockdown in our homes, so these vehicles have kept working to ensure that supermarkets have all the food and supplies that we, as consumers, need. But they have also been filling up the fulfillment warehouses that have allowed the big online retailers to feed our evergrowing on-line appetite. eMAG saw an increase in sales of 30% during the lockdown period alone and other e-commerce companies saw similar growth.

There is a saying in England that ‘Every cloud has a silver lining”. Covid-19 has been that silver lining for on-line retailers. Normal people who have never ventured online before have suddenly found themselves with their nose close to a screen as their fingers valiantly fight with a keyboard and the on-line ordering systems of the retailer with whom they are buying from. It is not just young people who have found a new way of life on-line but across Europe 83% of people between the ages of 65 and 74 are now buying online.

This age group is known as the Silver dollar, and it is spending well.

This increase for on-line demand was already happening across the world, but 4

the virus has accelerated this demand to warp speed. The effects will be felt from now onwards. Shops that have suffered hugely will now be fighting to claw back their customers. Customer loyalty is a thing of the past for the shops, ease of delivery and return of goods is the future.

There is a downside for the planet to this increased demand in that we all have seen how much lorries can pollute the air that we breathe. We have all seen the damage to the roads that a 38 tonne lorry can cause. But we all forget this damage as we order online. Electric lorries offer a solution and I believe that these will be on our roads sooner than we think.

The big grey boxes that you see adjacent to our roads and motorways are where nearly all the goods that you eat, use and wear are stored and these are now the new virtual shops of the future. I can see that there will be an increase in the demand for warehouses springing like a gazelle from all of our new online skills. Not only are these warehouses used to deliver goods, but they are also used for the goods that you return, each of which has to be checked by a human to see if they have been worn or used before being returned.

But what of the future? Logistics demand is always associated with the strength of the economy and people’s

confidence in the market, which influences their spending pattern. This is the great unknown at present and the only cloud on the horizon. With over 30% of the global population in lockdown and with business still trying to work out how many staff to reemploy, so the future spending power of the population is unknown. This uncertainty will affect the demand for logistics.

The economies of the world will recover. They did after two World wars, after the Spanish flu of 1918, after 9/11 and more recently after the recession of 2008. The economic recovery may be quick, in which case we will all be happy, but it could also be a slow process taking many months, and even longer if a second wave of the virus emerges as people forget the new rules of post Covid life, hygiene, social distancing and wearing masks.

For Romania and its regional markets there are two possible scenarios – First, there will be a reduction in demand for new warehouses as Pan European and internal consumption drops. There was growing demand for larger warehouses, but this demand will now slow down and there may also be additional vacancy on the market as occupiers either go bust or reduce their warehousing needs.

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MARKET PULSE REPORT - JUNE 2020

The second scenario is that as demand in Western and Central Europe drops so suppliers will become more cost sensitive. This will drive to an increase in production in Romania which will be further boosted by the fact that consumers are now worried to see “Made in China” on what they buy. Increased manufacturing needs more warehouses and so Romania will benefit.

International developers such as CTP have had much success in building speculatively and in buying both in Bucharest and many major secondary cities. P3 Logistic Parks have kept their focus in and around Bucharest, but they keep an eye out for further opportunities in major secondary markets. Other developers such as WDP continue to develop but it will be interesting to see how the effect of Covid-19 will affect the smaller developers who will now find it difficult, if not impossible, to secure debt for development. This in turn will mean far less choice for those companies which require new space as less warehouses will be built speculatively.

Over the past few years the automation of warehouses, through the use of robots or artificial intelligence, has increased throughout Western Europe. Due to the lower cost of employing staff in Romania so this has not been a major factor.

However, this move to automation may now increase even in Romania.

There are already fully automated manufacturing plants in Romania that make washing machines and car parts. Through the uncertainty that another increase in the spread of Covid-19 could lead to a further longer lockdown and a halt to production, so manufacturers will look to fully automate their manufacturing and warehouses. Robots do not catch the Covid-19 virus nor need to sleep, eat or use the restrooms!!!!!

Of all the real estate sectors, warehousing is the most resilient to the current World crisis, but have no doubt, it will be affected and there will be some form of correction. Land

prices are, and will, continue to drop, speculative build will dry up and construction prices will drop.

Romanian demand has always been linked to its European partners and their hunger for goods. The next 6 months could prove interesting as the Covid-19 story plays itself out.

Ian Worboys – Entrepreneur and former CEO P3 Logistic Parks.

Ian has 39 years’ experience in the Pan European Logistic real estate market and he led the expansion of P3 into Romania.

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the argument

THE CHALLENGES OF COVID - 33 So, here we are, in the crisis that we all denied or were too busy to see, trying to assess and understand the next steps. Beside the temporary sanitary crisis, the background includes changes in the ranking of the world superpowers, sovereign debt crisis amplified by the current struggle, new duels in editing the trade agreements between major exporting nations, a war on tariffs applied, major shifts in top 10 largest cities by 2030, us relying on mainly fake news resulted from artificial manipulative algorithms – our addiction to social networks and apps which we feed with data, audience and our own money, towards the cherry on top: the war for the next technology and platforms that will redefine our economies and lives – 5G, 6G… and the data driven modified global supply chain. Oh, yes, and politicians who will transcript the details in laws, making things better or everything worse. „Only about half the world is online and another 3.8 billion people need to be persuaded”, professor Vinton Cerf told Genevieve Bell, Director of the 3A Institute at Australian National University, during the 2018 J.G. Crawford Oration, also talking about standards that substitute for a bunch of bilateral negotiations to try to get pieces of technology to inner work in the current architecture of the internet. Cerf co-pioneered the internet, created the first commercial email system, has been working on an interplanetary communications systems since 2002 and currently is trying to figure out how to send and 8

Ionut OPREA Publisher receive data from Alpha Centauri, the closest stellar system to the sun. The key of the current historical change is mentioned by him even in a video, with epic small views compared to some music that we watch every day, but as a test of you reading this, drop an email or call, and we’ll go into more details.

Now, going backwards to my listed items, before you all turn LinkedIn into TikTok as one can notice recently, it is important that the real estate players and their suppliers, clients, partners, promoters make new strategies and communication according to international context. Ok, we entered into this crisis with 96% GDP growth for Bucharest in the last 10 years, highest in the CEE region (according to “CEE Investment Report 2019”, published by Skanska, Dentons and Colliers), but also with the “2030 Agenda - Romania’s Sustainable

Development Strategy”, which does not include in 112 pages the terms “artificial intelligence”. The 2030 Agenda was adopted at the United Nations Sustainable Development Summit though UN General Assembly resolution A/RES/70/1 in NY, in 2015, and the Romanian Government has established a Department of Sustainable Development in 2017, adopted the strategy in 2018 and now will have to rewrite it. With eight Amazon projects delivered

by Panattoni in Poland, the announcement of Microsoft Corp. for a comprehensive $1 billion investment plan to accelerate innovation and digital transformation in the “Polish Digital Valley”, Google the busiest lobbyist in Brussels since 2014, or Mark Zuckerberg positioned as key stability factor with his Facebook effects at the Munich Security Conference earlier this year, they will have more to think about. Maybe this time they will also talk to their new colleagues - The Authority for the Digitalization of Romania, reorganized and reinstated by Government Decision no. 89/2020. The lastmentioned institution just announced in May that over 400 people are interested to join a National Council for Digital Transformation, sort of a committee to support with insights the Authority for the Digitalization of Romania. Of course, “details” like that the capital has the shortest “network” of bicycle paths compared to others in the region or a delayed train connection from the airport to the city and a lost in time metro extension for M6 from the city to the same airport, WWW.TRANSILVANIABUSINESS.RO

will matter. If the current Governor of the New York State, Andrew M. Cuomo, stated that he will even change his name to Amazon Cuomo, just to get an investment for HQ2 of the tech giant, who will be targeted by the authorities in Romania and the business environment for the next recovery and growth market cycle, and with what arguments? A recent concept, without all details clear, was announced for the area around Romexpo - events and exhibition center, but the market still needs a joined strong alliance between developers and investors, at least those in that area and a new extended airport – and major infrastructure upgrades from the public sector.

One colleague from the media wrote earlier this year that the capital should attract at least 1 million new residents in order to make the planned developments viable, but actually we would need another 4 or 7 million more in a metropolitan area, to actually matter, in the region, in Europe or on radars of the global interest. Let us go back to competitions around us. In September 2017, Amazon announced a contest to find a location for a second headquarters called HQ2, promising 5 bn USD. in investments and 50,000 jobs - more than ever in a deal before.

The company invited cities to pitch themselves. 238 took them op on it, tax breaks and huge infrastructure were promised, huge prime parcels of land, in videos or statements, as mentioned.

In November 2018, Amazon announced two winners Arlington – Virgina and New York. Why the deal

Cerf has been working on an interplanetary communications systems since 2002.

was not finalized in NY is a story for another time. Relatively in the same time, in Europe - Amsterdam has won the competition to be the host city of the European Medicines Agency once it leaves London after Brexit.

Amsterdam beat Milan in the final duel after Copenhagen was beaten in the penultimate round of voting – announced in November 2017. The European Medicines Agency (EMA) has assessed the bids of 19 cities that

have applied to host its headquarters.

Bucharest was in the competition with a good project but not with an overall convincing application – Government decisions to expand Henri Coanda Airport since 1999, with a strategic plan updated from time to time, still with no major progress, most probably didn’t look to good compared with the 15 minutes connection of Amsterdam Airport Schiphol with the new HQ of EMA. A challenge: for 2030 in the post

Panattoni has built a facility for Amazon in Gliwice - Poland of record-breaking size and functionality.

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Aviatorilor 8 is positioned in Bucharest’s central business district.

crisis market cycle, will we still have an ugly ground parking in the heart of the Central Business District in Bucharest, or a theme park extension, a pedestrian zone, still a meeting place to protest or a giant space dock for drones and spacecrafts? Could private developers, investors, redefine Victory Square in CBD? So, tough years ahead, but if in the past decade 12 Polish cities and none from Romania were exhibiting at MIPIM in Cannes, or just some shy municipalities and companies were present at Expo Real Munich with AHK Romania or Transylvania Evolution, just a handful of participants or speakers were active in conferences like CEE Property Forum Vienna, or others in Frankfurt, London, Warsaw, Prague, Budapest, New York or Shanghai, with no integrated campaigns with the Government or municipalities, will we do the same mistakes again?

If we didn’t have much advertising in international magazines or a video to complete the campaign of Erste Bank on CNN, which started with frames with Romania, who will brake the ice with promotion on dynamic digital out of home in major world cities, and with what iconic project for the next 10 years, innovative enough 10

to get international recognition, beside symbolic awards in local gala dinners? If the Hungarian Investment Agency – HIPA is producing video news, see the last one about BMW at Debrecen - from May 2020, and Invest Romania produced one video in 2016, will this new crisis make us more creative? All respondents to the most recent study of the World Association of Investment Promotion Agencies (WAIPA) expect a decline in FDI, where 25 percent expects a decline in a range of 20-30 percent, 21 percent expect a moderate decline of merely up to 10 percent, 19 percent expect decline without reference to its intensity, 19 percent expect a decline by more that 30 percent, and 17 percent expect a decline in a range of 10-20 percent. Expected upcoming decline in FDI means that competition among locations will increase and extra efforts will need to be taken to secure projects.

We’ve seen pictures with the Prime Minister of Romania and some advisors with syndicates or business association or coalitions but not yet pictures with a meeting between de Government and owners and managers of Alinso, WDP, CTP, P3, Globalworth, Immofinanz, Anchor, CA IMMO, Iulius, Speedwell, NEPI, Dedeman, AFI, Genesis, Portland, to name in a random order

just a few. Or a panel with them and all major mayors in an international event.

But what is still at stake? Everything, with the post pandemic measures and technology progress acting as catalysts. For example shared serviced centers have been opened in 138 European cities between January 2006 and December 2015 (ABSL report with Deloitte, Hays and GLL - 2016 edition), but the new edition – EMEA’S Business Services Landscape (a report by ABSL with Deloitte, JLL and Randstad), just launched, talks about the emerge of an ever – increasing number of destinations for business services, sought after the significant number of companies thar are only beginning their transition to a business services model. Established organizations are also seeking further consolidation of operations and we know the increasing importance of information technology and insatiable appetite for technology skills, so here we are back in the fight for tech investors, key competitive advantages, city’s attractiveness, tapping into new talent pools or the sheer size of labor markets. The report includes data also about non- EU countries, including Egypt, and mentions the rapid evolution of the world of work WWW.TRANSILVANIABUSINESS.RO

and the problem for Europe - facing a growing crisis when it comes to accessing the talent needed. So, with money following tech, and tech following talent & data, Europe seems more in danger. The top 10 largest cities by 2030 include: Mexico City – Mexico, Lagos – Nigeria, Cairo – Egypt, Karachi – Pakistan, Dhaka – Bangladesh, Beijing – China, Mumbai – India, Shanghai – China, Delhi – India and Tokyo – Japan (as predicted by the United Nations’ (UN) World Urbanization Prospects, presented by the B1M, but you can find more data from the Global Cities Institute or World Economic Forum), so those might influence the trends in urban life concepts,

but also underline that our region needs major populated cities to matter in future business models.

What else is trending? Resilience. After three editions of the Safe Cities Index report from The Economist (where Tokyo again comes first overall, and Asia-Pacific cities make up six of the top ten, but you can study top five cities in each pillar—digital, health, infrastructure and personal security), a report from 100 Resilient Cities – available since 2019, a current global pandemic crisis, it is more clear now that safe & security will be a major thought for us in the coming years. 17 European cities have now chief resilience officers, the closest to our region – Belgrade, but I am not sure now that our city managers in Romania are aware, they need to know more than ever.

The particular model of Deputy Mayor for Urban Resilience that has been spreading across the region was pioneered by the City of Thessaloniki, with the introduction of the position of the Deputy Mayor of Urban Resilience and Development Programs in April of 2016.

Other cities have followed Thessaloniki’s example, with London appointing a Deputy Mayor of Fire and Resilience,

Athens a Deputy Mayor of Green, Urban Resilience, and Adaptation to Climate Change, and Lisbon a Deputy Mayor responsible for resilience and civil protection. “This trend across Europe and the Middle East signals the growing prominence of the urban resilience practice in the EU and among its neighbors. And the trend is expected to continue, with enhanced funding and financing becoming available, given that urban resilience has been deemed a key planning priority for the EU going forward” (Learning from the 100RC Network – July 2019).

About resilience is also this special market report, with details of the market pulse, measures and objectives, messages for clients and partners, directly from companies and managers, in the middle of an unprecedented pandemic situation, so I especially thank each of them for taking the time and the energy to respond also with optimism and clear plans for you to use in future business opportunities. Also, a special thank you note to the product partners: Crosspoint, CA IMMO, Vox Property Group, Catted, Cluj Business Campus.

Since 2013, we strived to publish also an eloquent, unique, business investment guide for the real estate market, so I am confident that you will discover more projects and ideas, from all the players in the market, in “Romania’s Real Estate Yearbook 2021” to be published in November 2020 and promote the good news for a more positive next cycle.

Meanwhile, a new positive challenge – how will we allocate and invest efficient the EUR 33 billion from the EU Recovery plan for Romania?

So welcome to the new Covid – 33 world…

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WDP EYES THE NEXT LEVEL OPPORTUNITIES WDP develops and invests in logistics property (warehouses and offices). WDP’s property portfolio amounts to around 5 million m². This international portfolio of semi-industrial and logistics buildings is spread over around 250 sites at prime logistics locations for storage and distribution in Belgium, France, the Netherlands, Luxembourg, Germany and Romania. Dana Bordei, commercial director, WDP Romania talks about plans and trends after the first half of 2020.

W hat type of adaptive measures the company / your project(s) needed? W hat were the lessons of this period?

We had an impact on construction sites, where less people worked in shifts with security measures to protect teams, but all our works went ahead as scheduled, honestly one of the lessons is to panic less in the future. We have a very diverse client structure, around 25% production – majority of them automotive and 75% different logistic providers or operators. All our tenants are large companies that could support operational costs during this period. In general, we continued our normal work and also our tenants; for example, Yazaki has 6,000 employees and not a single case was registered.

W hat is the status of your current project(s) and investments planned for 2020-2021?

From all the niches of the real estate market, I believe that industrial sector will be boosted af ter this period, a lot of trading activities will be moved online and we fill this trend. I think we will have some new investments, relocation of production facilities in the region or in our countr y. I think investors are looking at this sector more than at other asset classes. The office sector will be significantly affected, as a business lesson I think that ever ybody discovered that working from home is possible and productive.

Companies will discover that if they allow 1-2 days of working from home, they will need less office space and I hear a lot of them, even from our clients which have office spaces, that this period was a fantastic lesson from this perspective. We, in the industrial sector, are ver y confident that the outcome will be positive.

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W hat are your expectations from the public sector, state projects to support future business?

To create infrastructure, a plot for industrial is available every where, but if you don’t have the correct infrastructure to reach it, is not

viable. If infrastructure is not created in the rhythm we want, at least to create a coherent urban planning approach, in all the cities, and to approve zoning permits for large areas, so that developers won’t need to do a Zoning Urban Plan, WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

WDP Dragomiresti - Bucharest

to have them defined. Developers do not go in obscure locations, they want to settle in areas where there is logic for industrial, in all the cities. At WDP for example, we have developed all our 25 locations in the country with our work and expertise, but you would expect at least for the big cities, where is clear that industrial areas are necessary, to have predefined urban planning conditions and to worry only about the building permits. There are cities in the wider European region, where they offer all the conditions, in Romania we still have to overcome a lot of obstacles. Some coherence would be useful in HR legislation, for f lexible / part time work. Many companies complained, they had two options - send people home and close or if they wanted to remain active, they didn’t receive any help.

In all this period, it was the hardest for those who remained active.

W hat transformations you expect in your sector?

The prices will remain the same.

We contracted ahead the entire investments, when they enter the premises, a developer already spent all the investment budget, there is almost no possibility to adjust the margins, no possible way to optimize. I do not believe the prices will drop, there is still a strong demand and the vacancy level is relatively low. If something

dramatic will not happen also in the second part of the year, there is no liquidity problem or over production. There will be inf lation, because all the money spent in this period must be compensated somewhere, but I don’t see a general contraction, because all we had was a full stop for a while. Everybody will have a setback, due to the lack of production and sales for three months. The real impact will be acknowledgeable in Q4 and next year. The impact of automation will not be as fast as we talk about, but all the players are having a plan, and it was accelerated by this crisis. For automation the level of investments is very high, the human labor is still more cheap at the moment.

WDP and IFC, a member of the World Bank Group, have signed a financing package of circa 205 million euros. The funds will be exclusively dedicated to new build logistics development projects in Romania with green standard certification.

Several loans will be issued by IFC directly and through the mobilization of third-party resources for a total consideration of circa 205 million euros. The loans with a duration of up to nine years, will be structured as term loans and will be partially euroand partially dollar denominated,

W hat is your message to clients and partners?

We are still here, we were active in this period, the sites were developed further taking into account the safety measures. We are here to stay, we are a long-term investor, with a healthy company and strategy and all the willingness to go further. Not related to Covid, what we ask from our clients the most is to have realistic plans for the delivery of their future facilities, and not to think a deadline of 18 months and ask for the delivery in 9 months. The clients need to more realistic for the time frames of projects, the authorities move slower – for zoning permits or building permits. This is a message for clients: that they must be realistic to the whole process of development. with WDP intending to hedge the currency risk. The debt raising will support WDP Romania in the execution of its business plan, aiming to double the portfolio from 500 million to 1 billion euros throughout 2019-23, in line with the WDP strategic growth plan 2019-23. The proceeds will be used exclusively to fund new build sustainable development projects at important logistics hubs that will be EDGE certified, enhancing Romania’s logistic infrastructure and employment within a modern and healthy working environment.

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ZACARIA - THE OPPORTUNITY TO ADAPT TO CLIENT’S NEEDS “Other than a somewhat more cautious approach to investment the status of our ongoing projects remains unchanged”, Jonathan Diamantino, CEO of Zacaria.

The biggest adaption we have had to make, which in fact pretty much all businesses have had to make, is adjusting to the new Work from Home norm and all the while maintaining the viability of the business. The lesson learned is that the new norm has introduced time efficiencies that were not previously realised, however at the same time has caused issues with running a business which still need to be overcome. As the new norm becomes the everyday norm, a natural balance should result.

Which are the advantages of your business going forward?

In the industrial parks sector, the advantage that Zacaria has always had is that the company catered more towards small and medium sized clients. In doing so the financial impact on the company of a client seizing operations, or not renewing at the end of a contract, was and remains minimal. Additionally, having a large number of smaller clients always gives Zacaria the opportunity to adapt to its client’s needs, be it a reduction or increase of area rented, temporary rent payment deferrals, or requests for improvements.

What are your expectations from the public sector, state projects to support future business?

Zacaria`s expectations from the public sector are probably the same as all other companies operating in the same industry, in that, the public sector continues to under appreciate the positive economic impact that companies

like Zacaria bring to Romania. If the positive economic impact was properly appreciated then it is highly likely that the public sector would make efforts to be more time efficient in completing, or simplifying, the laborious construction authorisation process for industrial park developers such as Zacaria.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

It is clear that the social and economic impact of Covid-19 on all industries will manifest change. These changes can be beneficial in nature or detrimental.

In terms of HR one would expect that businesses will be taking a good look at their HR requirements and terminating any non-essential positions. The WFH, the new norm, may also have a positive impact in that, time lost travelling to attend meetings will reduce significantly and increase staff efficiency. This new norm will also have financial positive impact in that less money will be spent on fuel, air travel, hotels, entertainment etc, but more importantly the resulting reduction in the burning of fossil fuels will slow, to some extent, the human races impact on the world environment and wildlife.

From a business perspective the reduction in demand for fossil fuels is clearly not beneficial for petroleum producing companies, airlines, car manufacturers etc. In respect of costs, they should reduce somewhat in the short term as pricing is likely to be more competitive. On a more long-term view costs are likely to increase again once the general public feel it’s

Sibiu Network Industrial Park

safe to start spending disposable income on non-essentials as opposed to saving for the next economic crises. Covid-19 has forced governments to pump huge amounts of capital into their economies, Central Banks have reduced interest rates even further and loosened borrowing conditions, and commercial banks have worked diligently with their clients in order sustain their businesses during these unusual times. The probable result of these measures is that financing may become cheaper than it was before Covid-19, especially as there is likely to be far more cash available in the capital markets. The question is, what will be the medium- or long-term economic impact be resulting from these pre and post Covid-19 fiscal policies. Will they have created long or short-term economic stability? And if only short term then what is next?

What is your message to clients and partners?

The message is the same as it always has been, our clients are our business partners, we shall stand by them as we have always done, and we shall do everything to best of our abilities and possibilities to ensure that they survive these times but importantly recover and continue to be successful.

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RADICAL AND UNEXPECTED EVENTS TEST OUR ADAPTABILITY „Warehousing is ultimately a part of the essential infrastructure of a country. We are open for business and we will continue to seek the expansion of our portfolio with high quality assets in strategic locations� - Sinziana Pardhan, Managing Director, P3 Romania.

What type of adaptive measures the company / your project(s) needed? What were the lessons of this period?

During these exceptional moments, P3 has made a top priority out of the health, safety and wellbeing of its employees and business partners. We have implemented a variety of policies including social distancing, travel restriction, remote work and very stringent hygiene and health measures, allowing only necessary physical interaction. As far as our operations at P3 Bucharest A1 park concern, we have adapted to the changing environment very quickly, ensuring the continuity of our activities by making our services usable and accessible, without interruption.

Together with our facility management provider we have developed a robust plan tailored to secure the good functioning of our existing warehouses.

Under specific precautions and while respecting all protection measures, we implemented a technical maintenance scheme dedicated to guarantee that all activities within the park will continue to unfold under normal parameters. The global outbreak of the novel coronavirus is creating significant challenges for both leaders and organizations of all sizes. Nevertheless, the impact of lockdown was felt differently by each industry sector. Moreover, with the coronavirus triggering lockdowns and mandatory workfrom-home policies around the world, it is only realistic to observe how priorities and consumption habits have changed for many individuals, as well as it is to assume that some of these changes will become part of a new normal. I believe that such radical and unexpected events test our adaptability to new ways of working and to a different business environment, where 16

prudence and perseverance become modus operandi. Our culture as an organization, and our drive as professionals, helped us learn how to face this extreme situation and quickly adapt to the new reality. For P3 it is very important to stay connected to the market, to its requirements, and to the transformations that our clients and partners go through, to be able to meet our customer needs.

What is the status of your current project(s) and investments planned for 2020-2021?

The current projects and development plans of P3 Romania continue to advance at the same pace as before the health crisis.

We are open for business and we will continue to seek the expansion of our portfolio with high quality assets in strategic locations. We are a long-term investor-developer WWW.TRANSILVANIABUSINESS.RO

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P3 Bucharest A1

with the vision and financial strength to realize long-term value opportunities and we have a positive perspective about the evolution of our sector beyond the limitations caused by this health crisis. We are, however, looking with caution towards the and are staying close to the market to understand what the new normal will be like and what limitation and opportunities it might bring.

Which are the advantages of your business and products, going forward?

Warehousing is ultimately a part of the essential infrastructure of a country. Whether through stores or direct delivery, all products that reach the population pass through a warehouse. Around 60% of our tenants are operating in the food and e-commerce related businesses so before and during the lockdown period we have seen a large increase in activity inside

our P3 Bucharest A1 Park. We expect both segments to perform well in the coming period and for e-commerce we expect to see lasting effects from the demand perspective resulting in additional warehousing needs, which we are in a very good position to fulfill. Moreover, we are fortunate to have a strong and stable shareholder which allows us to access long-term, stable capital for our future development strategy in Romania.

and bring production closer to home. There are also discussions about increasing the safet y stock to ensure the abilit y to deliver products in case of external shocks as well as de-centralizing the logistic net works. However, both of these would have high cost implications and companies will weigh ver y carefully the risk/ cost tradeoff for such decisions. It is yet unclear which trend would prevail.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

There are a few major topics that are ver y much discussed within the industr y that could, but only time will tell to what degree they will materialize. On one hand, there is the accelerated adoption of e-commerce and on the other hand there is the desire to diminish the risks in the supply chain

What is your message to clients and partners?

We would like to reassure our clients and partners that P3 continues to be the same long-term, reliable partner and even though we are living difficult and challenging times, we are prepared to meet their needs. Responsibility will help us prevail and together we can see to safeguard the continuity of our businesses, while supporting the country’s economy.

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MARKET PULSE REPORT - JUNE 2020

THE FIRST 15 YEARS. OUR LESSONS & EXPERTISE, DEDICATED TO YOU Experiences, of any kind, lessons, numbers, celebrations and years together with people – these are the attributes of 15 years of full activity in Romanian real estate for Crosspoint.

“If I’ve learned something in these 15 years of Crosspoint Real Estate I know for sure that everything is in the power of the people: teams, partners, clients. As entrepreneurs, you may have an excellent vision of business, but without the right people, in every stage you cross, it’s nothing, so special thanks to our team”, says Codrin Matei, Managing Partner Crosspoint Real Estate.

We all know that real estate market is one of the most interesting markets of all, exactly because it involves so many people: developers, realtors, builders, architects, designers, lawyers, notaries and, of course, financial key people.

Over the time, with all of these parts involved, Crosspoint Real Estate has achieved many great transactions. “We gratefully remember some of the keymoments in our experience. First that comes in my mind is the transaction of Day Tower office building in 2019, not just because of its value, but mostly because of the great yield of this transaction, less than 7%, a yield achieved after more than 10 years in this market. So, yes, we really enjoy performance, not just the closing of a deal”, Codrin Matei explained.

Achievements over the years Day Tower transaction had a value of 34 million euros, the seller is Day Group, the buyer is CFH and it is the biggest deal that Crosspoint has closed to this day.

Amongst the great deals that the company has brokered there are 2 land transactions in Expozitiei area, Bucharest, with over 45,000 sqm and with a total value of 20 million euros.

In new office hub that is emerging in Grozavesti, Crosspoint has also successfully closed 2 land transactions, of almost 21,000 sqm, worth 11 million euros. Thus, Crosspoint has proved itself as the market leader in the land segment.

The international association

Crosspoint Founders - Codrin Matei and Mihai Dumitrescu 18

“For me these 15 years of the company were the biggest evolution that my career had. I think I was part of every sector of the real estate market, a WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

Ethos House is the new headquarter for Crosspoint Romania

market that offered me every chance and challenge that I needed to get here, at a point where we celebrate 15 years with successful performances as the amazing international association with Savills and a new office in one of the most beautiful office building in Bucharest – Ethos House”, Mihai Dumitrescu said, Managing Partner of Crosspoint Real Estate.

Crosspoint Real Estate become an international partner of Savills in 2017 and in 2019 become international associate. “Crosspoint has an excellent reputation in Romania and we were very pleased to make them a full Savills associate last year. We look forward to continue helping local and global clients benefiting from their market knowledge”, says Philip Ingleby, Chief Operating Officer, Savills Europe & Middle East.

“We go home, or we go high?”

Codrin Matei and Mihai Dumitrescu started the company in 2005, from an initial investment banking & highend residential consultancy company, the market evolution in the recent years and the related opportunities brought a transformational period for Crosspoint, becoming a full-service

commercial real estate advisory firm. The strongest services that the company delivers are in the office, industrial, land and residential consultancy, valuation services or project management. “Romania right now, except the current sanitary crisis, is a market full of opportunities and with high potential in the industrial sector, we know that the land transactions never stop and also we believe that the office sector will continue through its development – and this is only because the human interaction cannot ever be replaced”, said Mihai Dumitrescu. He thinks that the residential sector will always meet a human need – to have your own house, so even with a pause due to sanitary crisis, this need and investment, at the same time, will be accomplished even in the future.

“This entire journey brought us a lot of lessons and crises that we crossed. As for everyone the 2009 recession was an turning point and the exit from this kind of “hibernation” in 2012 made us ask ourselves if we go home or we go high and we chose to continue by being the best at what we do and now, in other type of crises we can promise to our partners and clients that we will be there for them every step of the

way. And we truly believe that this is only another lesson that will make us all even better, because we’re going through this together and regardless the times, we are still us - your partner”, Codrin Matei concluded.

Philip Ingleby, Chief Operating Officer, Savills Europe & Middle East

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MARKET PULSE REPORT - JUNE 2020

EMS FLOOR GROUP ADAPTS TO „THE NEW NORMAL” ALL OVER EUROPE EMS FLOOR GROUP, a Romanian multinational company who has been working with epoxy resin for the last 10 years, was surprised by a crisis that reached all the countries where the epoxy application teams have activity: Belgium, Luxembourg, France, Romania, Hungary.

Claudiu Baciu, managing partner, talks about the measures taken by EMS FLOOR GROUP in order to overcome this period and embrace the „new normal”.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

Safety of our employees was the first on our minds and we made all the efforts necessary in order to find the best solutions for them. Safety of the people we work with is a milestone in our organisational culture. Our purpose as a company is to change the world in a better place, create safe environments for the people using our flooring, create safe and secure jobs for our employees and a trustworthy partnership for our clients and providers. Afterwards we proceeded with scenario-planning and financial assumptions. We know that in time of crisis communication is essential and this was another focus for us to communicate openly and transparent with all our partners. At European level the activity of EMS application teams was different in each country. If in Belgium, Luxembourg and France the activity was temporarily suspended by the governments, in Romania and Hungary the sites remained opened, but a decrease was registered in comparison with the beginning of the year. Fortunately, our activity never stopped, we continued working, we signed new contracts in flooring application in projects from pharma industry and food industry. And where possible the EMS FLOOR GROUP management team has carried out, through telework. Telework is an alternative that we haven’t used to its full potential so far.

What is the status of your current project(s) and investments planned for 2020-2021?

The investments scheduled for 2020 of EMS FLOOR GROUP are meeting a little delay in comparison with what we’ve programmed at the beginning of the year. The delay is because of the internal budget remodelling made as a precaution and to the difficulty in obtaining approvals. A lot of projects are in progress at this moment in pharma industry, food industry, schools, hospitals and parking. We are optimistic about the future because one of EMS’s values is adaptability and we will have to adapt in 20

order to constantly adjust our business plans, there is no other solution if we want to achieve our objectives.

Which are the advantages of your business and products, going forward?

Our partners both clients and providers need our services in order to move forward. We are interconnected and we have to deliver a lot of projects with epoxy flooring and hydro systems as stated above. We adjusted our activity to the new measures and we are not stopping until we achieve our objectives.

Regarding the future, we have high expectations in an increase both for flooring and hydro systems because of remodelling of workspaces. Also, we expect an increase in public sector investments that will generate an increase for EMS FLOOR GROUP as well.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

While it is, obviously, hard to forecast the transformation of the market in the next period, what we do know today is that the activity will not be the same. If there will be support through investments at a regional, national and European level, we have all the chances to go in a positive direction. The Romanian market both on epoxy flooring and hydro systems is far from reaching its full potential, we expect for the Covid context to move the things forward.

What is your message to clients and partners?

All partnerships at this moment are great since we’ve all joined forces in these difficult moments, starting with the clients, providers, collaborators and employees. If everyone performs based on healthy values and honesty and join forces, we will always overcome any obstacles together. Although continuing activity at an European level seems to be a great challenge these days, companies like EMS are brave and they move the society forward.

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MARKET PULSE REPORT - JUNE 2020

ROMANIA HAS NOW A UNIQUE CHANCE “We do not foresee a decline in our investments, we see even more opportunities and business needs than before” – Ivan Lokere, CEO Alinso Group.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

The health of our employees and customers is a priority for Alinso Group.

The company and our staff have taken the appropriate prevention measures to ensure a safe working environment for our employees and business partners.

Alinso Group’s PWP Bucharest North business park is fully operational and we are working closely with our customers to service their specific needs in these exceptional times, to ensure business continuity and long-term growth.

covering a surface of over 300 ha.

Located in the immediate vicinity of the A3 Bucharest – Ploiesti highway, at the crossroads of 3 Pan European transportation corridors, and an inter modal terminal, the PWP Bucharest North Park hosts more than 3,000 employees, working for more than 60 international companies, from industries such as Pharma, Automotive, Logistics, High-tech manufacturing.

Which are the advantages of your business? What are your expectations from the public sector?

Our business will benefit for sure from the increased demand for industrial space as a result of reshoring and multiplication of industrial facilities on the one hand and the increase of e-commerce and stock levels on the other hand.

Romania has now a unique chance to attract international investments if it shows a clear commitment in growing the infrastructure. Not only in highways but also a quick roll out of the 5G infrastructure will make Romania an attractive hotspot for international investments.

Deglobalisation and localism will become more popular.

What is your message to clients and partners?

This crisis will accelerate some trends that already started before the crisis.

We go now through the valley and the world at the other side of the valley will not be the same. Therefore, it is important to understand how the world will be post Covid-19 and to prepare your business to be amongst the winners of the future. People will continue to work and spend money but there will be a shift in spending patterns rather than there will be a general decline. This crisis will result in a lot of moves of which the net outcome is still rather unclear.

Therefore, it is especially important for a business to be agile to adapt to changes. Building and keeping trust of the people in the company and your business partners will remain very important as trust is the fundament to flexibly navigate through this fast changing environment.

What is the status of your current project(s) and investments planned for 2020-2021?

The current project and investments plans remain in place as foreseen. For the projects that did not start yet, we will take the time to analyze whether we should adapt the initial plans in the context of the post Covid-19 situation. We do not foresee a decline in our investments, we see even more opportunities and business needs than before. PWP Bucharest North is the largest industrial park in South East Europe developed by Alinso Group, 21

MARKET PULSE REPORT - JUNE 2020

ROMANIAN INDUSTRIAL MARKET. DRIVERS OF GROWTH IN TIMES OF CRISIS Logistics plays a crucial role in the production and distribution of vital goods, from food to medical protection kits. “Beyond the fast adaptability to the new paradigm of COVID-19, logistics seems to be the key field of real estate for supporting economic recovery. The industry starts to take evident measures for creating better services and infrastructure” - Șerban Juverdeanu, Head of Development Global Vision.

Global Vision recently announced the launch of a new logistics project – Bucharest Airport Park – a boutique logistics development that will support activities related to trade and air cargo at Henri Coanda International Airport. Also, the real estate company continued all its development projects during the crisis, despite the challenges that came along.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

One of the major lessons of this period is putting health on the first place. Secondly, this crisis is a strong reminder that we cannot take anything for granted and every entity in the business field should improve the capability to adapt to challenges. ‘Business as usual’ has abruptly and significantly changed.

COVID-19 caused short and long-term disruptions in our lives and our work organization. With a 16-year legacy of responsible business, Global Vision has been developed large-scale industrial and logistics projects for people and their future, always respecting and enhancing the safety, health and well-being of our teams, customers, partners, and communities. During the last two months, we maintained our development activity in Constanta, Chitila, Oradea and Arad by applying all the safety and prevention measures and succeeded in keeping the delivery timeline as promised. As the pace of change has globally increased, we are confident we can quickly respond to shifting business dynamics, minimizing impacts to our developing, construction and management projects and disruptions to our customers and partners.

What is the status of your current project(s) and investments planned for 2020-2021?

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We have continued the accelerated growth in Romania and in the CEE region of Europe, despite the disruptions caused by the crisis. We opened many construction sites in 2019 and signed contracts with local and foreign investors. Two renowned German investors, manufacturers of auto components, had chosen our company to develop for them logistics and production centers in Oradea and Arad. Also, in 2019, Global Vision

launched Constanța Business Park.

An impressive project spread over a 100Ha land, near the Port of Constanța, developed in association with Globalworth. We continued the works at the development of Chitila Logistics Hub as well, the second industrial project we develop with our partner Globalworth. Certainly, we will keep and maybe even accelerate the pace for the coming years as the logistics field seems to have a crucial role in the WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

Constanța Business Park, developed by Global Vision & Globalworth

post-pandemic era. We target strategic locations. We believe in the power of cities, in projects meant to change local communities. To open their doors to new horizons of education and development.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

Infrastructure and digitalization investments are crucial. These two fields proved their significance during the last months and I strongly believe the authorities should focus on accelerating the pace of delivering large-scale infrastructure projects and increase the digital inter-operability of the public institutions. Regarding our activity, we are constantly improving our concepts and products, to make our industrial and logistics developments more adaptable and flexible. We have multiple options for accommodating the tenant in our single roof units – select specific compartments in close liaison with the tenant to suit best his requirements.

We also offer extension options to enable cross docking facilities and on the lateral sides to extend existing docking area. Secure basic necessities – loading bays, drive-in’s, car and truck parking; regardless of the unit size and location. Customized

office space according to tenant’s requirements – located in a boxin-box system inside warehousing space or outdoors adjacent to main storage unit, multiple floors options.

Various complementary services provided by the landlord in terms of financial assistance for acquiring racking systems, suspended mezzanine floor systems for specific operations, special floor treatments, temperaturecontrolled equipment. External storage platforms to accommodate various requirements for outdoor pallet, container, trailer storage, short and medium term.

What transformations do you expect in your sector, their effects for the Romanian economy and in a regional perspective?

The major change in everyone’s lives is shaping new directions for the future. We note the structural needs of storage, increased by rapidly amplified ecommerce and the supply of the population with food and medicines. Logistics warehouses and urban micro-warehouses were already active with high attention from the investors and large companies, so now they are seeing exponentially increased value. Romania is clearly on the radar of investment opportunities, especially for those companies that plan to keep their production activities inside the EU

borders. For example, Global Vision recently attracted two new German investments in Oradea and Arad and we are closely discussing other similar partnerships. On the other hand, the infrastructure deficiency limits the access of investors to the Southern and Eastern parts of the country. To achieve the dual objective of effectively serving customers and harmoniously integrating into the functioning of cities, urban logistics can rely on two pillars: the development of real estate adapted to its needs and the use of technology to optimize the operations.

What is your message to clients and partners?

Global Vision team will continue to do what knows best, staying informed, attentive to the recommendations of the authorities, properly guided in our activities and ready to adapt quickly and tackle any further challenge. We look forward to cooperating with our clients and partners to continue the development and investment activities, and also to minimize the potential impacts of this unpredictable situation on your lives and businesses. By combining real estate and technology, we can develop robust, efficient urban logistics that respects the challenges of tomorrow’s cities. These reflections and projects will involve communities and public actors, developers, logisticians, partners and clients.

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MARKET PULSE REPORT - JUNE 2020

BRISK GROUP

“IT’S OUR DUTY TO KEEP THE LIGHTS ON” “Brisk Group has the experience and means to help this business to reshape and respond to the current requirements, through our top-quality project and cost management services and highly skilled and experienced team”, Claudiu Bisnel, Partner Brisk Group.

Covid-19 pandemic has shown us amongst other things the importance of being flexible and adaptive. It has been key for businesses to react quickly and adapt to the fast changes that we all have experienced. There are positive aspects and opportunities coming from this difficult experience, as acceleration of digitalization of the construction sites, also enabling a more dynamic and efficient transfer of information between project stakeholders. In fact, the entire construction industry has benefited from this, consequently digital solution, internet / cloud -based solutions being ever more present as a direct consequence Covid-19 pandemic. Also, it had the effect of showing the benefits of a thorough planned approach to project management, which Brisk Group always deploys as part of our services. Having a structured and process driven approach to managing projects, we were able to react and respond in the new context and implement the required measures as to minimize any negative impacts. As one of the greats was saying: “To improve is to change; to be perfect is to change often” Winston Churchill.

What is the status of your current project(s) and investments planned for 2020-2021?

Together with our clients and partners 24

we have taken all necessary measures, adapting to the current situation and environment, thus keeping full steam ahead on the project we are involved in. We have passed through these difficult times with flying colors, due to an efficient approach with focused and concentrated efforts from the entire team. Now we are banking on the lessons learned in this period, Brisk Group is prepared for the new challenges and new social and economic context that lays ahead of us. We are, as always, one step ahead for our clients and partners! As always, one of our main priorities is to help our customers to find the best solutions to successfully adapt and structure their projects to the new environment. It is our duty to keep the lights on during this period!

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

It is clear that we are currently experiencing a recession, though this is not the kind of recession that has it fundaments into mishandling of finance and economics. This is a recession based on external threat to our health, a sanitary crisis that

impacts our ability to produce and consume (with a direct impact on supply and demand) with big emotional leverage as well. During these times, it is very important, for everyone of us to have a sense of security. This in turn will install confidence in society enabling everyone to feel more comfortable, fact that will have positive effects on the economy – bringing us closer to business as usual mode. As a consequence, it is crucial for business to react in these lines and create a safe and secure environment for their employees, customers and partners.

It is very possible that we will see an adaptation / reconfiguration of office spaces, restaurants, high street business, etc. Brisk Group has the experience and means to help this business to reshape and respond to the current requirements, through our top-quality project and cost management services and highly skilled and experienced team. Also, big infrastructure public projects are key to boosting the construction sector and in fact the entire economy.

These projects create traction around them, employing large number of business and people, unlocking new areas and new opportunities for business, offering connectivity, WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

Adaptive measures that Brisk Group implemented • Developed incident management and scenario plans specific to COVID-19 crisis • Developed rigorous social distancing protocols • Implemented safety measures in sites • Employee training regarding the new measures • Took the measures to minimize the risk of business disruptions • Assessing the remote working strategy and implementing it for most of the employees • Identify alternative supply chain scenarios • Accelerating digital transformations • Maintaining the best working procedures among administrative employees even from home

thus putting in motion the engines of the economy. Brisk Group has experience in big infrastructure projects, and we are keen to be involved and contribute. Our current experience includes involvement in big international aviation and nuclear projects. Through our experience and our values, we are a strong, keen, and devoted partner that you can count on! Assurance and Predictability are essential in this period and we are offering this through our suit of services and our top team of experts.

Our goal is to continue to deliver excellence through our services for our clients, to respond and anticipate client and projects needs and to maintain and develop the trust and good reputation we enjoy in the market.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

The construction industry is an essential cog in the mechanism of the economy. As always, the construction industry will play an important role in the revival of the economy. Brisk Group is well equipped to respond to the new trends and requirements of

Claudiu Bisnel, Partner Brisk Group.

the market. We have all the tools to assure the success of our clients, the effective and efficient implementation and delivery of their projects. Speaking from our own experience we can see additional and necessary increased measures, in the context of Covid-19 pandemic, being implemented with regards to health and safety which naturally attract additional costs to the projects. Also, we can see a rearrangement in prices with regards to labor (as this is more available), cost of material being influenced in close relation to transport, delivery times and production. As we are still in a transition / adaptive period, with regards to the new circumstances, created by the coronavirus pandemic, our estimation indicates a returning to normal scenario in the following

months as lockdown period measures in a number of countries will be lifted gradually. We are systematically entering in a more optimistic economic period with a sensible recovery in the first quarter of 2021.

What is your message to clients and partners?

It is important to work hard and responsible to do our best no matter the circumstances. Predictability and flexibility are key for business, and we have the tools and experience to offer these to our clients and partners through our top-quality project and cost management services. We will continue to be an innovative, robust, trustworthy partner providing highquality services and always being one step ahead for our you!

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MARKET PULSE REPORT - JUNE 2020

“WE ARE CONTINUOUSLY LOOKING AT BTS PROJECTS” More companies are looking to have smaller hubs in regional cities spread across the region and the same goes for Romania, where there is interest in cities that have not been on the map so far Loredana Oprisa, Leasing & Development Manager at Helios Phoenix.

As soon as the pandemic began, we focused even more on communication with our clients, making sure that all sites have the necessary safety measures taken through additional steps added, this being different depending on the client’s activity.

Each tenant adapted to the situation to their best possibilities, some splitting shifts, some having their own check points to sanitize and control temperatures before entering/ leaving the workplace.

What is the status of your projects / investments for 2020-2021?

The ongoing construction sites, located in Brasov and Timisoara, are going forward without any changes, of course we had to take extra safety measures as we continued. As for the projects we had in plan for Cluj, Constanta and some other locations we will have to look how the economy will develop in the next few months to be able to reorganize our development calendar accordingly. Of course, we are continuously looking at BTS projects, even in locations that we are not yet present.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector?

The advantage for the industrial sector, especially for the logistics part, lays mainly in the fact that during these times the e-commerce sector grew and that brought along an increase of volumes to be handled, hence the need for storage space went up in some industries. Also, a positive impact is expected in production area as some companies are switching their focus on local resources as to not be exposed in case something like this were to happen again and supply chain might be disrupted.

The expectations from the public authorities go towards having them support the industrial sector through constant legislative improvements.

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More attention should be paid towards supporting business owners, through different channels like state aids and easier access to information and funding.

What transformations you expect in your sector?

We believe there will be an increase in e-commerce sector as more and more companies are looking to expand in this area, if they are not already there. As most companies are looking to have a better coverage and a more sustainable supply chain there will be some

changes in how they do their location analysis. As it seems, more companies are looking to have smaller hubs in regional cities spread across the region and the same goes for Romania, where there is interest in cities that have not been on the map so far. I believe it is too soon to tell, but as consumption levels overall will go down, there will be some pressure over the economy and that will have an impact over future developments. By the end of the year we should be able to have a clearer view of how 2021 will look like. Regarding labor force, even if many people have WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

Olympian Park Brasov

returned, I find it hard for the economy to retain and accommodate a big part of them. In this matter the public – private sectors should work closer together and come up with better ways to bring them “back home”.

Helios Phoenix has been actively operating and trading in Romania since 1997. Since 2003, with the construction of their first Industrial Park in Domnesti in the south western outskirts of Bucharest, the group’s activities have mainly centered on the industrial real estate market and related services. In 2005 Phoenix commenced the development of Mercury Logistics Park and joint ventured with Helios Properties UK, a major British industrial developer to form Helios Phoenix in order to undertake industrial developments across Central and Eastern Europe.

During the period 2006-2007 Helios Phoenix established joint ventures with GE Real Estate and Cal East Global Logistics for industrial developments in the Central and

What is your message to clients and partners?

We are in this together and we have done and continue to do our best to work with our clients towards finding the best solutions. We believe

that a crucial thing during these times is to prove the power of the long-term partnership established over the years. Our focus is on BTS projects in the core cities but also in other strategic locations.

Eastern European region and agreed forward funding sales with CB Richard Elis in Eastern Germany and Heitman International in Romania. In 2010 Phoenix acquired The Helios share of the Joint Venture thereby increasing its stake in Helios Phoenix to 90% and remains active in the Romanian Property Development Market progressing the various industrial and residential developments of the Joint Venture. In 2010 Phoenix acquired The Helios share of the Joint Venture thereby increasing its stake in Helios Phoenix to 90% and remains active in the Romanian Property Development Market progressing the various industrial and residential developments of the Joint Venture.

To control its operations, Phoenix is organized in independent Romanian

companies which own the properties with Cypriot Holdings companies on top. The management however is centrally controlled by Phoenix as being the overall Project Manager of all the properties either wholly or partly owned. Helios Phoenix Portfolio is made of 3 existing industrial parks and 3 other locations with available landbank for future developments, these being in different phases of permitting. Bucharest, Timisoara and Brasov add up to a total of 145k sqm, split between tenants active in logistics and production. Helios Phoenix is an expert in customized buildings having in its portfolio but also in past projects developed and sold be it units for frozen and temperature-controlled goods, production facilities or for light storage purposes.

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MARKET PULSE REPORT - JUNE 2020

BANAT BUSINESS PARK Developed infrastructure, rapid access to foreign markets and staff availability are the main reasons why investors are attracted to the largest industrial park in Western Romania.

The remaining area of the Industrial Park, of approximately 74 ha, will attract new companies interested in developing production, logistics, research or technological development activities in Eastern Europe. Along with all the benefits offered by positioning

and access to foreign markets, Banat Business Park, together with partners, offers the possibility to build logistics and production spaces for rent for interested customers.

Banat Business Park is located in Sînandrei commune, at a distance of 5 km from Timișoara, the capital of Timiș County and an important economic, tourist and cultural center of the western part of Romania. Regarding the

access roads, the Industrial Park is at the intersection with the future express road that will make the direct connection between the A1 Budapest - Bucharest Motorway, E69 and Timișoara (the city being on the 4th European Corridor). At this moment, the connection between E69 and A1 is made on the Timisoara Ring Road, continuing on the current connection road DN 691.

The park has a total area of 85 ha, approved zonal urban plan and benefits from developed infrastructure to meet the requests of any client. The plots, in total number of 41, are sold with all the utilities included in the price of the land and can be merged and divided, if this was requested by a customer.

Banat Business Park is certified according to Law 186/2013, receiving in December 2016 the title of Industrial Park. The clients of the Industrial Park benefit from the exemption from the payment of taxes and duties for a period of 49 years, under the conditions of Law 186/2013 and according to the Decision of the Local Council of Sînandrei City Hall no. 21 from 27.07.2016.

For more details, please contact us at: +40 756 090 689, email: office@ banatbusinesspark.ro, contact person: Iancu Oana Simona, Development Director

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MARKET PULSE REPORT - JUNE 2020

THE CRISIS DEMANDS CONSTANT READJUSTING AND AGILITY Noerr’s Bucharest office, founded in 1998, is today one of the leading advisory firms in Romania, providing integrated legal, tax and financial advisory services. Prof. Dr. Jörg K. Menzer, Partner, Head CEE Offices, Noerr, evaluates the implications of a cross-disciplinary crisis.

What type of adaptive measures the company needed? Which were the lessons of this period?

We have set up Noerr Corona Crisis Task Force and established the Noerr Corona Crisis Center through which we reacted to the emerging economic disruptions as early as at the end of February. We realised the necessity of an immediate and adaptable response to the crisis and we created a range of advisory services, with the focus on all issues relating to coping with the consequences of the coronavirus crisis.

In these last months, Noerr has also experienced strong demand for advice on distribution and employment law issues as well as on capital market law issues or numerous aid programmes for securing companies’ liquidity. Besides the common internal changes, like work from home and digitalisation measures, we, as partners, have also shouldered the economic risks that we are now facing, not only through honouring our commitments, but also doing our

Noerr expertise 4 Corporate/Mergers & Acquisitions 4 Private Equity 4 Real Estate Investments 4 Employment & Pensions 4 Banking & Finance, Insurance & Reinsurance 4 Litigation, Arbitration & ADR 4 Restructuring & Insolvency 4 Compliance & Investigations 4 White Collar Crime 4 Commerce & Trade 4 Distribution 4 Regulatory & Governmental Affairs 4 Antitrust & Competition 4 IP & Data Privacy 4 IT & Outsourcing 4 Energy 4 Healthcare 4 TMT 4 Financial & Tax Advisory, Management Consulting 4 State Aid 4 Accounting & Payroll

utmost to help those who need our support. We are still at the beginning of this crisis and so are the lessons. We must not jump into conclusions too fast as the situation is still developing and the crisis demands constant readjusting and agility and so do we, in adapting to the constant changes and challenges.

What is your message to clients and partners?

One thing that Noerr has been focused on and the CEE region especially was anticipation. We deal with a lot of uncertainty and the leadership cannot wait until things happen, we have to prepare in advance and take into consideration several scenarios. It is also a cross-disciplinary crisis in which both the sanitary, the economic sector and all the involved industries have to cooperate more than before and the challenge is on the experts and leaders to come up with a holistic strategy for dealing with both lockdown periods as well as long term approach during this crisis. One of the key aspects, considering the social distancing and work home, is therefore the active involvement of the people in this process. We all have to come up with suggestions, ideas and initiatives to address the situation and to help guide

our firms through the crisis and into the future. Nevertheless there are also opportunities that the crisis unlocks, either to rethink their businesses or to figure out how to do what we do best, under the new circumstances.

Noerr stands for excellence and an entrepreneurial approach. With highly experienced teams of strong characters, Noerr devises and implements solutions for the most complex and sophisticated legal, tax and financial challenges. United by a set of shared values, the firm’s 500+ professionals are driven by one goal: our client’s success. Listed groups and multinational companies, large and medium-sized family businesses as well as financial institutions and international investors all call on the firm. As one of the leading European law firms, Noerr is also internationally renowned with offices in eleven countries and a global network of top-ranked “best friends” law firms. In addition, Noerr is the exclusive member firm in Germany for Lex Mundi, the world’s leading network of independent law firms with in-depth experience in 100+ countries worldwide.

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THE CURRENT CIRCUMSTANCES CONFIRMED THAT RUSTLER’S IN-HOUSE SPECIALISTS AND KNOW-HOW, REPRESENT A POWERFUL TOOL “The SARS-Cov-2 pandemic brings unique challenges, but also opens opportunities to validate the importance of property and facility managers on the Romanian market” – Daniel State, Managing Partner, Rustler Romania.

What type of adaptive measures the company / your project(s) needed?

Rustler in Romania provides property and facility management services on various business sectors: industrial & logistic parks, private healthcare, office buildings and shopping centers, nationwide.

When the state of emergency was declared - mid of March, business were affected dramatically by the lockdown and for us, the travel restrictions were the first logistical challenges in providing the necessary services. Furthermore, we had to adapt and implement quickly and efficiently “work from home” solutions for our employees, in order to be able to ensure continuity, in a business where very specific skill sets are necessary in-situ. During this period, our internal reporting and controlling procedures proved their important role in performing our dayto-day activity, in a new, unchartered environment.

Among the first measures implemented at organizational level, were those necessary for our employee’s safety, then - business continuity. Worth mentioning the processes of own staff and subcontractor’s training processes in how to plan and perform, keep the buildings operational throughout the affected period when no/little activity was in the premises and to be prepared in constant alert for any unpredictable eventual incident. Regarding our projects and clients, as their activity was restructured, in some of the cases it was necessary for us to reallocate resources on operational levels.

As property and facility managers, in Rustler we consider that optimizing running costs is a mandatory key aspect on a daily basis. Furthermore, in a crisis generated by a global pandemic, when in general business environment became unstable, the 30

pressure to minimize running costs and at the same time comply with all legal and technical regulations/ requirements turns out to be more challenging. During this period of time, we understood that it is vital to adapt our way of working, in order to efficiently maintain unoccupied buildings. With attention on the emergency systems, actively monitoring and operating the collateral support technical systems and equipment, we focused on real energy efficiency in unoccupied/ unutilized spaces, as a coordinated effort to reduce the utilities and operational costs. In the meantime, we still had to ensure that the occupied and operational spaces are supplied with all necessary services and comfort, without altering agreed service levels.

What were the lessons of this period?

The most important lesson we’ve learned, both as individuals and as company as well, was our power to adapt to the “new”. Personally, I was pleasantly surprised of the real proactivity and endurance of the colleagues on the operational levels, both in property management as in facility management departments, demonstrating the spirit of our company.

What is the status of your current project(s) and investments planned for 2020-2021?

As in Romania the SARS-Cov-2 outbreak has drastically altered the use of the built, as most of the office workers had to perform remotely in “work from home” system, shopping centers, medical facilities and hotels were closed, we consider that, at this point, the real-estate environment is in a process to adapt to the current situation; we all witnessed a moment of forced digitalization in many fields.

There are still unknown reactions to this economic disruption, therefore we are focusing to adapt our procedures,

protocols and plans, including finding new technologies. Nevertheless, the properties we manage are and will be on a constant change, and given the specifics of our property and facility management activity, the main investment shall be in people along with updates on technology that can serve for a better and more efficient operation of the buildings Rustler manages. Based on our clients and tenants specific needs, we take pride in our capacity to quickly adapt!

Which are the advantages of your business and products, going forward?

The SARS-Cov-2 pandemic brings unique challenges, but also opens opportunities to validate the importance of property and facility managers on the Romanian market, as they represent an important and necessary support service in all areas of real-estate.

Since it started operating in Romania, Rustler developed and trained own specialized in-house teams and employees with specific expertise, being able to comply autonomously with the strict local legal norms in life safety systems and very specific technical requirements.

We in Rustler, understand that the power of in-house specialized knowledge represents a vital skill set, providing us the advantage of going forward even in crisis such as the current pandemic. These days, the knowledge of our property managers in coordinating and managing assets in optimal and most profitable ways, represents both advantages and challenges, in the same time.

However, these challenges force us to adapt, adopt and change our perspective. Meanwhile, through permanent collaboration with our clients, we created and implemented a new culture of health and safety standards in the buildings we WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020 manage and our goal is to upgrade these standards constantly, via our guidelines and regulations.

As a fact, all the above represent an advantage for Rustler’s ongoing and future partnerships, by assuring the proven business continuity.

What are your expectations from the public sector, state projects to support future business?

Referring to the public sector, adapting and applying the laws enforce to the current situation and keeping their activity (public sector) transparent as we (private sector) do, should suffice for companies to perform and further contribute to community, businesses and overall well-being of the society.

Opening to dialog and constant communication for mutual benefit and digitalization of processes in order to ease processes and eliminate bureaucracy is still crucial.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

Post-pandemic, we expect a raising of the awareness regarding the importance of developing coherent H&S strategies. Some companies will need to adjust their strategy, organizational capabilities, and culture. It might be expected that landlords will strive to reduce the costs which, in some of the cases, already are underpriced, therefore implementing and maintaining a more restrictive set of health and safety regulations under the cost pressure will become the biggest challenge for the facility management sector.

New technologies such as robotic assistance, IoT, etc., may be required to be implemented. As consequences, the supply chains can be reviewed due to deeper process of value engineering by aligning them, to the new requirements of the landlords.

It is important to understand that these upgrades are coming with the corresponding price tag.

In the services providing sector, the most important cost is the cost related to employees. Artificially imposed/ requested and irresponsible operational expenses costs reduction in our segment has two immediate effects: a social one and technical/economic impact.

As our businesses relate to our specialized personnel, and we are

Daniel State, Managing Partner, Rustler Romania.

trading professional know-how on all our operational levels, the first direct impact is in the personnel costs, which creates a social effect.

On the other hand, the negative impact on the buildings systems which

will appear in time due to improper or lack of maintenance, will be noticeable in functionality and its running costs, capital expenditures value and even in legal implications, in case of severe damages.

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ELEMENT INDUSTRIAL DIVERSIFIES ITS PORTFOLIO WITH NEW DIVISION FOCUSED ON SMALLER, INCITY PROJECTS The acceleration of the transition from traditional to online retail will lead to sustained demand for class A storage spaces in locations that can ensure reliable delivery in a shorter time span. “We estimate a growing demand for warehouses closer to the city, or even in the city. Therefore, we are now working to diversify our portfolio by purchasing or developing smaller warehouses within the city to serve this type of demand”, Muller Onofrei, CEO & Co-Founder, Element Industrial.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

As developers, continuity has aspects related to existing tenants in already finished buildings as well as concerns related to on-going works on construction sites. We took a number of measures to ensure business as usual (or as close to normality as possible) for existing tenants and we worked closely with our general

contractor in designing site specific measures that allow construction to go on unhindered. The key take-away from this public health crisis is that developers need to take an active role in planning for black swans. It is a logical contradiction indeed to plan for a black swan but systems need to be put in place that allow flexibility in development. For example, small batches versus massive speculative buildings is one of them. If one

should prepare for the unexpected, it is important not to launch big construction projects, but smaller (and more often started) incremental building projects.

What is the status of your current project(s) and investments planned for 2020-2021?

ELI PARK 1 is the first logistics park in the portfolio of Element Industrial, totaling 50,000 sqm GLA. The first phase of 20,000 sqm was delivered last summer and leased to Arctic, while the second phase with an area of 30,000 sqm is being delivered during this period, some of the tenants of these warehouses being Paste Băneasa or Dentotal. We currently have secured several locations for further developments both in Bucharest and in cities such as Craiova, Bacau, Targoviste or Timisoara. We are currently focusing on authorizing and developing these projects.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

As a smaller player we have the advantage of flexibility and we enjoy a better adaptability to market demands.

In Bucharest, we have developed a new logistic hub, in Chitila – Buftea, with an easier access to the North of the Capital City. The acceleration of the transition from traditional to online retail will lead to sustained demand for class A storage spaces in locations that can ensure reliable delivery in a shorter time span. We estimate a growing demand for warehouses closer to the city, or even in the city. Therefore, we are now working to diversify our portfolio by purchasing or developing smaller warehouses within the city to serve this type of demand. As far as the public sector is concerned, we consider that the best investment is in new infrastructure

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projects which will generate, on a longterm, new private investments, with obvious positive effects in the entire economy. We have three suggestions for the state- infrastructure, infrastructure, infrastructure.

What transformations you expect in your sector, their effects for the

Romanian economy and in a regional perspective?

It is obvious for all of us that there are (and will be) transformational effects of this crisis. One of them is of course the rethinking of the global flows of goods.

There are important questions to be answered that would define global trade for years to come. Will China suffer

from a reluctance by western economies to further depend on critical imports from the region? Would this all be forgotten rather fast? Will the European Union play a strengthened economic role or will it subside in importance?

There are many moving pieces now. We should be sure that Romania will remain a cost-effective country for Europe to invest in. We are at the sweet spot where safety and reliability meet reasonable costs and decent regulations. I think Romanian authorities will finally realize that infrastructure projects (rail, road, waterways, energy) that connect us to the west of the continent are the most important investments that can be made, with the strongest multiplying effect. As a second important point, from a technology disruption perspective, Romania has many arguments in its favor. It is one of the leapfrogging effects that will play out in the following years. These meta trends will be accelerated and enhanced by a foreseeable migration of production facilities and trade flows from Asia to Europe. In short, Romania is not in a bad position, and the logistics and industrial real estate sector is set to benefit long term.

What is your message to clients and partners?

We are positioning ourselves to be able to act swiftly in order to satisfy market demand and to take advantage of the opportunities when the economy will turn. While it is not business as usual, we would like to assure our friends and partners that we are a reliable long term companion that is highly adaptable to all weather conditions.

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THE DIGITAL 6TH SENSE IN CONSTRUCTION “Digital solutions, such as project management, asset management processes etc., have become a go-to option for the construction industry” – Mariana Garstea, General Manager SIXENSE GROUP Romania & SEE.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

Unlike many industries, where workfrom-home and drive-thru services are feasible, the construction industry, and here we are too, needs jobs on sites to run. SIXENSE Romania trained all its employees on distancing rules that include no handshakes and set up an internal dedicated and empowered COVID-19 response team. All site coordinators are trained to closely monitor the employees’ behavior to make sure that the guidelines are properly followed. All employees have undertaken the „Covid Referent” 34

internal training. Our employees were often leading the example on site by implementing protective measures being set beyond our Clients requirements. We are very grateful that we can send our teams outside every day and that we can fulfill / honor our contractual commitments even during this difficult time.

What is the status of your current project(s)?

Now, we have one site temporary on hold and I hope it will be the only one. All the other secured projects are running according to the established planning at the beginning of the contract.

What are the advantages of your business and products, going forward?

Digital solutions, such as project management, asset management processes etc., have become a go-to option for the construction industry, in need of a way to efficiently manage the daily tasks, the communication processes, but still to remain as safe as possible during the COVID-19 crisis. SIXENSE’s software solutions are dedicated to follow and manage infrastructures and worksites and our platform, besides other benefits, sustain our clients’ needs to reduce the operational and human risks and during this period this has been highly demonstrated and well appreciated.

Given that the entire economy has been affected, expectations are high, but we must be aware that the state also has certain limits. I really would like, at least, the facilities for the construction sector to continue to be maintained by the state.

What transformations you expect in your sector, their effects for the economy?

Strictly referring to our activity, we noticed very clearly that the private projects were affected much more than the public ones. Private projects, that were supposed to start this Spring/ Summer, have been postponed, suspended or are being readapted in the context of the actual crisis. We are all aware that there will be financial consequences, but we cannot, at this time, accurately estimate their impact.

The dynamic of daily events makes us a little uncomfortable on defining longterm strategies, but by taking the most appropriate short or medium-term measures, we are trying to minimize the negative impact on the future company development.

What is your message to clients and partners?

We all need to make sure that the construction industry continues to work. Extraordinary times demand extraordinary, but I would better say… different and more flexible approaches.

Be aware at how your decisions affect other businesses: try to find the best ways to collaborate. We all are in this together.

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INDUSTRIAL PARK BRASOV, STILL EXPANDING “The clients of Industrial Park Brasov are Romanian and foreign companies, which decided to develop their activities in Romania based on a long-term rental scenario. The production halls are built according to the clients’ specific requests, depending on the activity they perform. We offer fully serviced business sites for medium and large sized companies” – Calin Costan, General Director, ICCO. Since we first acknowledged the new situation we are all facing, we, as the team to administrate the Industrial Park Brasov, fulfilled a series of measures to help protect the people and to prevent the spreading of the virus. We organized training sessions to inform and implement the new rules for social distancing, protective and preventive safety measures were applied, protection materials and equipment were acquired, and regular disinfection actions are taking place.

On the other hand, internally each of our clients have implemented their own rules to protect their employees and their families. During this lockdown period, some companies, where possible, arranged working from home for their employees, some companies faced difficulties in supplying the necessary materials from China, other companies active in automotive industry reduced production based on the fact that their clients temporarily closed the activity in western Europe.

Altogether, given the measures that were implemented by each of us, we are glad to be able to say that there were no outbreaks of infection within the Industrial Park Brasov. And as a direct result, the production activity of our clients was affected to a small extent, they all maintained production while implementing the safety and protective measurements imposed by the present situation.

What is the status of your current project(s) and investments planned for 2020-2021?

Following our strategy to continue to develop our project, this year we will finalize the investment in a new 9,600 m2 production hall. Once this hall will be delivered to our client, the total surface of the Industrial Park Brasov will be 140,000 m2. Also this year we will start construction of a 20,000 m2 logistic hall, a kindergarten for the employee’s children and a grocery store, all these to be finalized in 2021.

Which are the advantages of your business and products, going forward?

We know that the Industrial Park Brasov is excellently positioned in Romania. Brasov has an excellent development potential, a remarkable industrial tradition, an important technical university and offers a strong local environment to attract foreign investments. Another key advantage for Brasov city is the large number of foreign language speakers, both English and German. We are continuously developing our project for all existing customers and we look forward to partner with new companies which are planning to rfurther develop or relocate their activity in Romania.

What is your message to clients and partners?

First of all, we would like to thank to all our clients for the excellent cooperation through all the 12 years of existence of our project. We would like to thank our partners as well, for an excellent

partnership throughout the years, through good times and hard times, for supplying quality materials, equipment and services just in time, which allowed the proper functioning of the industrial park, at the parameters required by each client. And we would like to welcome our future clients which will choose to be part of the success of the Industrial Park Brasov - the Greenfield build-to-suit solution for development plans in Romania!

INDUSTRIAL PARK BRASOV 4 Our project is operational since 2008 and it is developed on a surface of 58 ha of land, with more expansion possibilities.

4 Build-to-suit production halls totalizing 130,000 m2 with 100% occupancy rate.

4 Our clients are industrial producers world leaders in their fields of activity.

4 More than 6,000 employees working on site.

4 All required utilities are available, with no blackouts.

4 All our customers benefit of the following centralized services. www.parc-industrial.ro 35

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VGP MUST CONSTANTLY BE READY TO RESPOND TO NEW INVESTMENT OPPORTUNITIES “We expect that the existing trends (before the crisis) will continue and even accelerate: urbanization, digitalization, e-commerce, last-mile logistics” – Adrian Crizbasianu, Country Manager, VGP Romania.

What type of adaptive measures the company / your project (s) needed?

What were the lessons of this period?

Nothing is more important to VGP than the well-being of its employees and partners during the present struggle with Covid-19.

The company and its stakeholders also recognize that life, work and business will continue after this crisis, and they are helping VGP to remain strong and ready for the future. The VGP team has mostly been working from home since mid-March. Where possible, construction work has continued.

Incoming rental payments have so far been little impacted. Our primary focus today is the health and safety of employees and partners, yet, due to the agility of our teams and operating model acting as in-house contractor, our pre-let development pipeline is running nearly entirely on schedule.

Combined with a full order book, a diversified and quality tenant portfolio across a broad range of industry segments and a strong balance sheet, we hope and believe we are well placed to weather the current storm.

What is the status of your current project(s) and investments planned for 2020-2021?

Wherever was possible, construction work has continued: our pre-let development pipeline is running nearly entirely on schedule. VGP launched in the midst of COVID crisis a new joint venture with Allianz for the VGP Park Munich which is under construction (photo) and a 200 Mio Eur capital increase of VGP NV that was a complete success – reconfirming investor’s confidence in VGP. In Romania, the construction site for expanding VGP Park Timisoara by 20% (additional 30,000 sqm) is running full speed with first deliveries planned for Q4/2020. Expanding the land bank to secure nation-wide development & coverage in upcoming years is another priority that is in focus for 2020 and is executed almost at normal speed in spite of crisis.

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VGP Park MĂźnchen

Which are the advantages of your business and products, going forward?

With a full order book and 80% of our developments under construction pre-let and VGP being well financed, we feel that we are at present well sheltered from the tempest created by the massive economic disruptions and potential global economic upcoming recession due to the coronavirus COVID-19 outbreak. But we will have to see which impact all of the measures taken to control the spread of the coronavirus COVID-19 will have on our customers and suppliers before being able to make a more detailed analysis. We see mainly two big advantages of our business.

The logistics sector is undergoing rapid changes. As E-commerce continues to reshape consumption patterns, businesses and third-party logistics providers are prioritizing the delivery process within their business model. The existing trend towards more e-commerce has been accelerated by the current crisis & will increase significantly the demand for modern storage space in the market. We have a longterm view as we continue to only purchase land when we have the legal certainty that we can use the land

for its intended purpose. We are and remain confident that the real value of VGP is embedded in its land bank and the excellent locations it is made from and we believe that this will remain so over time, throughout any crisis. Developing the best plots of land requires more and more time and effort and when the opportunity arises is difficult to predict. That is why it is extremely important that we keep a large capital buffer available at all times. Only in this way and provided we have enough reserves, can we respond quickly and ingeniously to opportunities for land purchases in a market where scarcity prevails. Despite the current uncertainties in the market, VGP must constantly be ready to respond to new investment opportunities and remain loyal to its basic investment principles, which are based on a long-term vision, throughout the economic cycles. Only in this way can we secure the further organic growth of VGP in the long term. Also thanks to the current large pipeline of pre-let projects under construction, we are optimistic about our future.

What transformations you expect in your sector?

We expect that the existing trends (before the crisis) will continue

and even accelerate: urbanization, digitalization, e-commerce, lastmile logistics. To all those & particularly for Romania we foresee a re-localization from far distance & near-shoring to Europe of some production facilities who’s output is mainly directed to EU market, this being a positive demand driver for Romania’s Logistic & Industrial RE sectors.

What is your message to clients and partners?

We know we have to earn the trust and respect of our shareholders, employees, customers and the communities we serve every single day. We are devoted to doing this!

Today, in response to the outbreak of COVID-19, as the health and safety of our employees, their families, our partners, and communities remains a top priority, we have taken all possible (precautionary) measures to minimize health risks throughout our pan-European platform and to contribute to the attempt to stop this pandemic whilst at the same time maintaining fully operational all our parks and services.

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URBANO PARKS - A STRATEGIC PROJECT FOR THE LOCAL COMMUNITY “Now, with our newly built industrial park, we bring jobs closer to this community” - Daniel Paraschiv, Co-Founder, Urbano Parks.

What type of adaptive measures the company / your project(s) needed?

First of all, we are positive and confident even after we passed through this challenging period, because we managed to follow through the initial timeline of the construction, and we have delivered the spaces to our tenants. Due to the crisis caused by the SARS-CoV-2 virus epidemic, some of the materials and equipment we initially intended to use could no longer be delivered and we had to modify part of the construction solutions.

In addition, in order to reduce the risks of illness, we have minimized the interaction between teams using a more efficient coordination of activities, even if all these measures have generated additional costs. For sure, since we have adapted rapidly and, due to the fact that we had the resources to assume the additional cost, we have managed to finalize the first phase of our industrial real estate development. An important asset was also the convenient setup for our park, from the very beginning, in a prime location for logistics and industrial activity, with a sustainable development as construction materials and long-term usage.

With great satisfaction, we have just handed-over the spaces to our tenants from the first phase of 8,500 sqm. The second phase consists also of additional 8,500 sqm and we will be able to deliver in September 2020. The third phase includes an extra close to 10,000 sqm and is planned to be finalized for the next year, when we the occupancy ratio is going to be proper.

Which are the advantages of your business and products, going forward?

Urbano Cluj Vest is a very flexible A class space where we can provide both docks and drive-ins in modules starting

1,150 sqm. We have planned this kind of spaces because we intend to grow with our tenants. Urbano Parks location is in the West side of Cluj-Napoca, between Florești and Gilău, a newly residential and commercial developed area. Now, with our newly built industrial park, we bring jobs closer to this community. Because of the location and the possibility to bring jobs the people leaving in the area, Urbano Parks is considered a strategic project for the local community and we have the full support of the authorities.

What transformations you expect in your sector?

In this global context, in addition to ISU and environmental standards, the need of spaces with well-defined and controlled flows, which ensure optimal conditions for the security of human resources and goods, is evidently increasing. Considering the unemployment rate, industrial sector and infrastructure investments can keep or increase the actual jobs market in the local community, so we are prepared to provide spaces in order to relocate or start rapidly new projects.

What is your message to clients and partners?

We believe our city Cluj-Napoca is a strategic point for future industrial market development. Our purpose is to attract foreign investors who can make a bet on Cluj, on the human resource from here, on implementing new technologies and on the ability to adapt on globally competitive requirements. At Urbano Parks we prepare class A spaces, precisely to meet the most demanding needs.

What is the status of your current project(s) and investments planned for 2020-2021?

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NEW MILESTONES FOR 2023 CTP further expanded its portfolio in Romania and in the vicinity of Bucharest where it owns three properties: CTPark Bucharest West, CTPark Bucharest and CTPark Bucharest Chitila. Also, CTP brought an ambitious Business Development Manager in Transylvania – Emilia Tepes, to double its portfolio in the region.

The most recent purchase finalized is located near the capital, on the A1, at km 13, which was bought with approximately 30 million euro from Forum Serdika, in the beginning of March 2020. Equest Logistic Park covers an area of 11 ha split into 2 plots of land fully developed holding 3 (three) logistics buildings, fully occupied. The project boasts a GLA of 57,000 m2. “This acquisition represents a significant opportunity to further consolidate CTP’s dominance at km 13, where we boast one of our main hubs in Romania, CTPark Bucharest. I do believe in Romania’s development capabilities in terms of infrastructure and attraction of new investments. The acquisition will enable CTP to access a new range of tenants that prove strong opportunities to grow their operations in Romania,” stated Ana Dumitrache, CTP Romania’s Country Manager. CTP plans to incorporate built-to-suit buildings with specifications matching key occupier requirements.

“We are decided to increase our stock of logistics and industrial spaces which is now at 1,200,000 m2 GLA of A-Class warehouses spread throughout Romania”, further explained Ana Dumitrache. CTP is extending its business development team with Emilia Tepes joining the management department. Emilia will take charge of CTP´s Transylvania business development activity. Emilia’s challenge is to fill up all existing buildings of CTP in Transylvania, but also to grow the local portfolio by 15% at least annually, which is the growth rate of CTP group in general, and actually double Transylvania portfolio until 2023. “I am

very happy and proud to have been invited to join CTP team, the largest industrial park developer in Central & Eastern Europe. I hope I will be instrumental in assisting CTP to achieve its ambitious targets for Transylvania, as I am convinced that the opportunities in this area are vast and we are only at the beginning of their exploration”, says Emilia Tepes.

10 million m2 by 2023 CTP announced a new aggressive growth plan to achieve a portfolio size of 10 million m2 by 2023. Company is currently considering partnering with a strategic investor. CTP achieved a capital base of over EUR 2.5 bn at the end of 2019 and the company is well placed to achieve the target of growing its portfolio to 10 million m2 of lettable area by 2023. The size of the portfolio under consideration for sale is confidential. The CTP logistics portfolio is based in the core markets of central Europe including the Czech Republic, Slovakia, Hungary, Romania, Serbia and Poland and is comprised primarily of CTP-developed premium space, occupied by some of the world’s most respected and innovative companies, who represent a wide range of business sectors. At the end of 2019 CTP’s entire portfolio including offices and hotels stood at over 5.5 million m2 with a further 760 thousand m2 under construction. CTP holds the leading market position in the Czech Republic, Slovakia, Hungary and Romania with a rapidly growing presence in Serbia. CTP has a track record of success, with over

Business Development Manager - Transylvania, Emilia Tepes

21 years of continual growth based on its commitment to high quality buildings, sustainable building practices, and high level of in-house customer service. The CTPark Network is central Europe’s largest system of strategically located parks, covering 6 countries, with over 500 clients. Customers benefit from the Network’s scale and reach across the growth markets of central Europe, and can grow their business in the locations that best suit their needs, knowing they have a long-term development partner in CTP, whose vision aligns with theirs. CTP is also committed to reducing our carbon footprint and we have the target to have carbon neutral property operations by 2023.

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RESPONSIBILITY CAN BRING NEW OPPORTUNITIES. „ADLO wants a better and fair development of the industrial area as well as the city of Oradea, in this sense the company has been involved in new projects of support and labor fource attraction, one of the most current problems of the period we are crossing�, the general manager of ADLO, Alina Silaghi states.

What type of adaptive measures were necessary for the company?

Considering the period crossed, we tried to adapt first of all as an organization that manages the industrial parks of the city and implicitly offers services to over 100 companies, so we followed the measures taken internationally and with the support and involvement of Oradea Municipality we distributed free thermometers for units with more than 25 employees. At the same time, we sought and contracted the delivery of protective masks from a local supplier at reasonable prices that were resold to companies at the purchase price, as a support measure in carrying out their activity in optimal conditions. The main lesson was the need to adapt and face the situation through responsibilities and rational decisions that would allow the functioning of the activity by adopting all possible measures regarding the protection of employees.

What is the status of your curent projects and investments planned for 2020-2021 Throughout this period one of our main concerns was to focus on projects started or underway so that once we resume the activity of the economic environment we are ready to provide all the promised services. One of the most important projects is the endowment of industrial

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park 4 with utilities and access roads.

Which are the advantages of your business, going forward?

We strongly believe that this experience will be useful to us and that in the future we will be better prepared for similar situations. In this sense, we collaborated with the Management and Implementation Department of projects with international financing from the Municipality of Oradea and with local companies to submit a project that can cover the needs for research and

development in areas of interest to Romania, one of the topics of interest being the pharmaceutical industry.

What transformations you expect in your sector?

The main transformation in all sectors was the digitalization of state institutions, the adaptation of the private sector to remote work, home working, as well as the adaptation of employees in such a way that the efficiency of the work performed does not change.

What is your message to clients and parteners?

All companies mobilized in an admirable manner and supported with substantial sums the struggle of local public authorities to equip the Municipal Hospital with equipment and consumables so necessary in the fight against Covid-19, providing an example of sustainable development and social responsibility. With their help, Oradea managed to have the ability to react, to fight not only the medical effects of the pandemic, but also economically. I believe that responsibility and turning to market changes, although a challenge for the economic environment, can open up new opportunities.

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INDUSTRIAL

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“WE WILL CONTINUE TO INVEST IN TECHNOLOGY TO IMPROVE CUSTOMER EXPERIENCE” We are all aware of our responsibility in these difficult times and we will continue to invest in technology to improve customer experience – Karla Codrea, CEO at DPD Romania.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

COVID-19 reminded us of some important things. First of all, a serious business with a solid foundation manages to get through difficult times.

To this must be added the need to adapt to the specific conditions of a difficult period. These conditions can mean both limitations and opportunities, both of which are equally significant. As far as we are concerned, we had two main objectives from the beginning: the people safety (employees and customers) and the smooth running of the business.

With a series of measures, we tried to counteract the further spread of the coronavirus and protect our people and the customers. We have complied exactly with all the security measures announced by the authorities. All our workforce, and in particular our couriers, are aware of the need for hygiene measures. We provide all our depots workers and couriers with disinfectants, disposable gloves and masks. In addition, all DPD Romania couriers are equipped with MPOS terminals, so that the payment can be made contactless, both by card and by phone. We have implemented the new processes for contactless parcel delivery, where possible, and at the same time ensuring that parcel shipping throughout Romania is safe and secure. The company’s network of parcel shops was temporarily unavailable, but now we are gradually opening them again for business.

Another important lesson is the need for transparent communication both within the company and with the general public - customers or potential customers. As far as employees are concerned, this contributes, both in normal times and especially in COVID-19 times, to increasing the cohesion of the team, the pride of working within the company - this is an aspect we especially care about. As for customers and the general public, 42

with all the inherent risks, we believe that it is important for them to see us as we are: normal people, concerned with doing our job well.

What is the status of your current project(s) and investments planned for 2020-2021?

The COVID-19 crisis forced us, of course, to make several re-evaluations of the initial business plans. For example, we had to make certain investments that we did not plan for this year: we have increased the number of couriers and we’ve

invested in new equipment (like scanners, printers, MPOS devices).

Also, the safety measures came with unpredicted costs. We have increased the number of persons working in the depots with more than 10% and we are still hiring. Looking to the future, we will continue the policy of investing in infrastructure development.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

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We remain consistent with the principle that as long as we conduct our business on a solid basis and respect the principle of fairness and quality, things will go well. This is our main advantage: we have healthy principles, we like what we do and we are constantly improving the quality of our services. The fact that we are part of the DPD Group, the most important road network for deliveries in Europe, also gives us another major advantage. It is about the strength of a large and strong European family.

From here comes another advantage, which differentiates us from our local competitors: we deliver parcels internationally. Normally, the courier market will continue to grow. The COVID-19 crisis has brought this habit of online commerce to many.

Also, e-commerce concentration will accelerate further as large e-tailers become even stronger. If last year, Romanian e-shoppers made an average of 35 online purchases, this year we expect the number to increase.

Regarding the expectations from the

authorities, in a normal crisis the government secures the liquidity of the economy, supports the companies until people start consuming and working again. But this will be more challenging because this time the priority is first to fight against the pandemic. Mainly we hope that the authorities will ensure a competitive business environment, with fair rules, applied equally to all market players and predictability.

What transformations you expect in your sector?

During this period, consumers are learning to spend differently and may become more selective in the products they buy even after the end of the coronavirus crisis. Potential change in buying habits will further impact our industries in new, unexpected ways. Some outcomes of this crisis are already becoming obvious, like the increase of the e-commerce which will accelerate the demand for B2C deliveries to home and out of home. Digitalization will accelerate

while work from home will become a new norm. We have to be ready to accompany these changes.

What is your message to clients and partners?

Even in these challenging times we aim two important objectives: to be a reliable shipping partner for our customers and to take care of the safety and wellbeing of our people.

We are all aware of our responsibility in these difficult times and we will continue to invest in technology to improve customer experience. Our team is working with all its energy to deliver every parcel reliably. The health of our employees, shipping customers and consignees is our top priority.

In the meantime, it is our role and responsibility to offer our continued support and cooperation to hospitals and to those affected by this crisis.

Reducing risks and vulnerabilities will ensure we make it through this crisis together, stronger and ready to face future challenges. Because #WeAreInThisTogether 43

INDUSTRIAL

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INDUSTRIAL

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SPEEDWELL, STAYING ON THE RIGHT PATH “I believe that no matter the cycle in which the industry is at any point, the area, the infrastructure and the design of every development are the key success factors” – Didier Balcaen, Co-Founder and Partner, Speedwell.

What type of adaptive measures the company / your project(s) needed? What were the lessons of this period?

Even from the beginning of this pandemic situation, SPEEDWELL has implemented the necessary measures to protect the health of the employees, clients and suppliers.

Starting from the third week of March all our staff has been in a “work from home” system, keeping up with the schedule of all our projects, with the available means.

Fortunately, the construction sites have not been influenced by the restrictions, so we have been able respect our deadlines, without neglecting the protective conditions imposed by the authorities. I believe the main lesson learned is that we can be efficient in any condition as long as we follow the objectives and respect the plan, with the help of the IT technology available nowadays.

What is the status of your current project(s) and investments planned for 2020-2021?

We are preparing the delivery of the Record Park mixed use project in Cluj-Napoca and Triama Residence (Phase I) for this year and also started two new developments in Bucharest – The Ivy residential project and MIRO office project in Baneasa - which will be delivered at end of 2021. Also, our new mixed use project in Timisoara, Paltim, is in an early stage of development, still working on the concept design and permitting.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

I believe that no matter the cycle in which the industry is at any point, the area, the infrastructure and the design of every development are the key success factors, and we are happy with the choices made until now for all the above projects. We have included various facilities in each development, in order to offer most of the necessary services to any

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client close to his home or his office.

The quality of the construction process is also important, but for that we have already a lot of experience gathered.

Regulations needs to be set in place to fuel the economy also during crises. First of all by not applying general measures, which cost a lot but don’t help, apart from getting political gain and create a legal framework that is prepared to financially support those that really need it, which isn’t everyone. In addition, the government and the EU take measures to support banks and provide them with cheap money, but then the banks themselves pull the break to avoid risk, fuelling the downward spiral. When central banks provide cheap cash, banks should be obliged to make it available immediately (all DD considered).

What transformations you expect in your sector?

Market specifically, we will see “pandemic” clauses appear in contracts and some items like WFH and digitalization, which were already there, have opened the eyes of the non-believers so this trend will continue. The market reports don’t show any important changes in the price trends, this being corelated with the fact that the costs haven’t change for the developers in terms of construction materials and cost of labor.

Record Park – Cluj-Napoca

What is your message to clients and partners?

We believe a lot in the Romanian market, and as we all know, the real estate industry has its ups and downs, but better times will come and we all need to carefully monitor our businesses and personal lives until we will get through these strange times. For our clients, rest assured we will deliver our projects in the timings established at the quality promised.

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LOOKING AHEAD TO A NEW EXCITING CHAPTER OF GROWTH In a gray period, when we face new challenges in finding new projects and inspiration, there are also opportunities like research and discovering new ways of work. For the moment, our clients’ requirements haven’t change that much. On the other hand, due to the fact that more people have to work from home we expect to see an extended housing concept. The new trend will be with apartments that are no longer at the lower limit of the built-up areas, but maybe with an extra room for work or a home-office concept.

Looking ahead to a new exciting chapter of growth, our plan is to open an ADNBA DE division in Germany. We look at Germany as a market with a lot of future potential for us. It is a stable and solid market and Berlin has proved throughout the last 15-20 years to be “the place” in Europe when talking about local opening towards global diversity in design. We know the competition is strong, but we also know that our team is very talented and highly skilled and that we have developed a set of diverse, powerful design and management tools, which can help us compete with almost any other local or international company, especially on the residential market.

On the Romanian market, in residential projects one of the trends is the request for integrated ensembles, larger and multifunctional developments which bring together in the same place homes, offices, public and green spaces, services or sports facilities that add value to the dwelling qualities.

This type of integrated, large-scale projects are new in Romania. Up until now almost no investor was willing to invest so much time in the design

Avalon Estate Bucharest developed by Prime Kapital 48

arh. Andrei Șerbescu

process and face the financial security of a long-term investment. In the changing context we believe large scale integrated projects are a good direction that can lead to more coherent and sustainable projects in terms of their durability and security of investment over time.

When there is a mix of functions, they support and help each other.

arh. Adrian Untaru

Architecture is no longer at the object scale, but at the overall level.

Our experience for this type of mixeduse project – at a neighborhood scale – is Avalon Estate developed by Prime Kapital on a 8 ha site in Pipera. The project will comprise detached houses, semi-detached houses, apartments in small buildings and private villas, as well as common facilities such as a clubhouse, gym, kindergarten and large park directly accessible to inhabitants.

A better standard of living is achieved through the design of several side functions in the same place as opposed to isolated neighborhoods, without related services nearby and quite far from your working place downtown.

Another ongoing project of ours, for mixed-use – at a building scale – is ISHO A (Mulberry Development). The project is a 20-storey tower in Timișoara, near Bega River. Our building is part of a bigger masterplan that will redefine the entire Take Ionescu – Baader area and will include housing, offices, hotel, services, and also cultural and sports WWW.TRANSILVANIABUSINESS.RO

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Isho Timisoara developed by Mulberry Development

amenities. The volume of our building also emphasizes the integrated services that take place inside. The base is larger and comprises the first 4 floors. The ground floor remains for commercial spaces usage and it is open to the street through a portico. The next floors are for offices and the 4th floor is for recreational areas and swimming pool.

In the office sector, we believe more and more clients are looking to build office spaces in the central area of the city. For this year and the coming one, we have an important construction site for our ongoing new office project.

It consists of the development of two office buildings situated in the heart of Bucharest on Victory Avenue - Sector 0 (Forte Partners). This is also an urban reconfiguration project. The ground floors of the buildings will comprise commercial spaces, bars, cafes and services creating a pedestrian area between Ion Câmpineanu and Matei Millo streets. In the design process, we also had to pay attention to the landscape design and how we connect the two buildings, which are, affront one another. We believe in having more of these sustainable developments that focus not only on the design of the building, which is very important of course, but also on the landscape,

Tandem developed by Forte Partners

creating public space in between buildings and the context. Thus, investors give something new to the city as well as to their future tenants. arh. Andrei Șerbescu, arh. Adrian Untaru

ADNBA is an integrated architecture services studio working on large scale projects, over 23 projects built and having achieved a wide international recognition and 14 international awards. Andrei Serbescu and Adrian Untaru founded ADNBA in 2003, later joined by Bogdan Brădățeanu and Esenghiul Abdul as partners.

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OPEN SPACE A THING OF THE PAST? “Tenants will choose very wisely their new office, and new criteria will emerge”, Andreea Paun, managing partner Griffes, is analyzing the impact and trends due to the recent wave of challenges in the industry.

and that will most probably result in an increase of the average area per employee. Green spaces and terraces will be more sought after in a world of steel, glass and disinfectant. On the landlord’s side, we already see developers’ efforts to adapt their products and implement safety features from the construction stage.

All market players have been, more or less, impacted by this period of restrictions, but what is important is that all of them are brainstorming and trying to find solutions for the future. Adoption of digitalization might be one of the answers for some, if resources are still available, better communication with partners and employees, financial prudence or a combo of measures and best practices.

The focus for 2020-2021

For the office market in particular, we see different approaches from tenants’ side. Following the two months of working from home being implemented on a large scale, employees are slowly returning to their offices. On the short term, part of the companies extended the work-from-home option for their employees. Other companies organized different schedules or shifts for a gradual come-back to the office.

All of them, however, implemented 50

safety measures. On the longer term, companies are starting to be more conscious about their workplace and assess how they can benefit from a healthy environment, or on the contrary, what impacts their efficiency.

We therefore estimate tenants will choose very wisely their new office, and new criteria will emerge. Also, high density workplaces are prone to change. Large open spaces are a thing of the past. Companies will rethink their offices, their workflows,

Our plans for 2020 remain steady towards growth compared to 2019.

We are focused on gaining new representation mandates for landlords that are looking to optimize their portfolios or the performance of their buildings. We believe we have the best landlord representation team in the market, with sophisticated capabilities that – now, more than ever – are appreciated by investors. We look to replicate success in our previous projects, such as Unirii View – 100% leased to reputable tenants, in central Bucharest, or Record Park (the latest being unaffected by the pandemics behavior and continuing its path to be leased 100% upon delivery, in summer 2020) or the office portfolio of One United Properties, which is starting to show impressive results due to a team effort supported by our marketing strategy.

The message to clients and partners All of us will need to rethink and adapt our business models, we should value the partnerships and show leadership, be it inside our companies or in our business environment. Communicate more open and franc. And most importantly, the message that has always been the main message to our teams: learn and be agile.

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MARKET PULSE REPORT - JUNE 2020 Marian Roman, Managing Director, CA IMMO, Romania

“TOGETHER WE CAN BE STRONGER” CA Immo specializes in office properties in Central European capitals and controls property assets of around € 5.2 bn in Germany, Austria and Eastern Europe. The company covers the entire value chain in the field of commercial real estate, from lettings and management to project development based on a high degree of in-house construction expertise. CA Immo was founded in 1987 and has been listed on the ATX index of the Vienna Stock Exchange, with free float of around 74% at the present time. The company, based in Vienna, has branch offices in Frankfurt, Munich, Berlin, Belgrad, Bucharest, Budapest, Warsaw and Prague.

What type of adaptive measures the company/your project(s) needed? What were the lessons of this period?

In many affected countries, governments have mandated or advised work from home for all employees — an unanticipated situation for most organizations that requires them to quickly review and modify existing policies. For CA IMMO this important change of way of working has been surpassed with success, as during last years the company had created the network and had implemented the remote work, as an option/facility offered to the employee. Remote-work success depends heavily on whether you trust employees to do their work even if you can’t see them. As well, employees who work from home often manage their time so as to leverage the time of day when they feel most productive, and they don’t suffer unnecessary interruptions to the degree they do in the office.

What is the status of your current project(s) and investments planned for 2020-2021?

In Romania, we aim to secure as investments outstanding asset quality combining prime locations with highgrade building quality, but we do not see real pressure on decision process for the next 9-12 months, as the local portfolio is stable, but depending also by the market flow/challenges.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

The Covid-19 pandemic has caused disruption across asset classes, and office real estate markets are “by no means immune”, however it could take several months or longer for data showing the true impact of the virus. New occupational demand will drop away significantly this year, and a complete market recovery next year remains very uncertain.

What is your message to clients and partners?

Together we can be stronger, cooperation is crucial in overpassing the COVID-19 challenge, by meaning of implementing/ applying all sets of hygienically measures in the buildings, necessary to re-start and continue the office work in safe conditions.

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ANY CRISIS IS THE DRIVER OF A NEW OPPORTUNITY “As urban environments are being reinvented in real-time, we need to think and act differently and using KONE’s expert knowledge, data, and simulation tools, we can provide an understanding of how physical distancing measures impact people flow”, Catalina Dragomir, Managing Director, KONE Romania.

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

The new COVID-19 area made us to see a different perspective, from Health & Safety of our employees to subcontractors challenges into the sites where several subcontractors are working in parallel; our employees H&S is zero priority for KONE so we were monitoring all the authorities communications and recommendations and using the global experience on KONE level for best practices we have been able to protect our employees and to provide them the necessary protective measures; supplementary regular trainings on specific topics have been conducted and working instructions have been adapted to the situation. We are also encouraging remote working and the digital tools we have already implemented in KONE have been a real support in this period. The most important lesson learned is that any crisis is the driver of a new opportunity and in KONE we have use it to increase our employees digital competences creating a new style of work where connectivity is playing a key role; if you are doing a proper communication, regular trainings

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and continuous contacts with your employees then all will work as a team and will be more efficient, safe and engaged.

What is the status of your current project(s) and investments planned for 2020-2021?

Our projects depend on our customers planned investments and the key ingredient is trust that we will follow

the rules, will invest in H&S and will respect our promises. On hold projects are only exceptions and we have supported also high-risk projects like COVID-19 hospitals modernizations or maintenance providing full confidence and trust to our customers that will keep our engagements. We have also found solutions for delayed projects as hotels modernizations supporting customer’s needs and now we are working together with them to close the projects that will help sustain their business. Another initiative to support our customers is linked with the new solutions answering to COVID-19 challenges, as health and wellbeing trend will stay as a focus area for customers and end users.

During this short period of time in KONE we have been able to leverage existing features and solutions and to develop new ones that reduce the need to touch surfaces, help to prevent the spread of disease, contribute to a healthier environment, improve communication. All these solutions have a clear business impact allowing us to differentiate by understanding customer’s needs and advising them on existing solutions that could meet WWW.TRANSILVANIABUSINESS.RO

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their requirements to continue the business and to fulfill the end users expectations.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

We have quickly adapt our portfolio and provided for our customers solutions to mitigate COVID-19 effects and the feedback is positive as we have already received orders to implement these solutions. Our new products portfolio with DX build-in connectivity enable remote call solutions and partner solutions to be compatible with our elevators; this advantage will enable also customers to develop their own applications and connect them to our elevators. The new elevators became future proof for similar challenging situations in the future addressing the new reality; also in future new partner solutions are easy to be enabled once the connectivity is there. The public sector and state projects are part of our portfolio and with the new offerings we can address and solve the challenges they are facing due to COVID-19. Don’t forget that the pandemic created a huge pressure on public sector from hospitals to schools, airports or metro stations and new solutions are required to address the needs for health and protection and minimize the people flow disruption.

What transformations you expect in your sector, their effects for the Romanian economy?

After COVID-19 we will face a “new normal” and each part of our life will be transformed, either that we are discussing about personal, social or professional one. In our sector we have already saw an immediate impact on transport prices due to the countries restrictions and regulations.

Due to the quick reaction and control implemented in the Group we have been able to keep a functional supply chain with no delivery delays or shortages. For sure all the required protection measures will have an impact on the projects profitability irrespective of sector or user, but even H&S measures are having a financial

impact this is minimal compared to employees, customers and end users importance to business. Change of business was not difficult as KONE is already part on digital era with the new technology that we are providing to our customers so the only adaptation had to be done on H&S level and employees interaction.

Technology disruption is already part of KONE offering and from this perspective COVID-19 impact speed up our business transformation.

What is your message to clients and partners?

We are living in unprecedently times and with uncertainty looming large, everyone is wondering if this is the new normal. If it is, how will it affect our lives and influence mobility both in the short and long-term and what we can do about it? As the world

enters the new normal, safe and clean environments will be a priority and KONE’s health and well-being solutions will help ensure a smooth transition to this changing reality. As urban environments are being reinvented in real-time, we need to think and act differently and using KONE’s expert knowledge, data, and simulation tools, we can provide an understanding of how physical distancing measures impact people flow in a specific building, and what measures could help reduce crowding and bottlenecks.

We are a reliable partner and the local organization with the support of Group Centers of Excellence is fully committed to support our customers’ needs providing three tiers of customer deliverables that both deploy our existing People Flow capabilities and help our customers re-open their businesses.

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THE NEW NORMAL: SOLVENCY, FLEXIBILITY AND TRUST Estoria City is one of the largest urban reconversion projects in Romania that reclaims a former industrial site for the benefit of the city and its citizens. We believe that its development is the next big thing happening in Bucharest as it expands – Cristian Hiver, Development Director, Estoria City.

The first measures that our company has taken were aimed at employee safety.

We decided that those who can carry out their work from home should do this as soon as possible. We have limited social interactions and we have adapted quickly by using various tools that allow us to be in contact with colleagues and ensure a productive workflow during this period. If the presence was mandatory, we took all necessary hygiene and distancing measures. To protect workers on construction sites we took additional measures, including constant monitoring and strict rules of access and sanitation.

What is the status of your current project(s) and investments planned for 2020-2021?

We will continue working on site respecting all preventive and hygienic measures. As it is a complex project, it will be developed in several phases that will finalize in the construction of 1,200 apartments, about 50,000 sqm of office space, over 40,000 sqm of commercial space, 3,000 sqm of parking spaces and 25,000 sqm of green spaces. The investments will be significant in order

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to achieve creating a new business, commercial and residential hub in this less exploited area of Bucharest. In the next two months, Leroy Merlin, Kaufland and Lidl stores will open their doors. We will also start the construction of the first residential building, the commercial gallery and the hotel.

Which are the advantages of your business and products, going forward?

What are your expectations from the public sector, state projects to support future business?

Estoria City is one of the largest urban reconversion projects in Romania that reclaims a former industrial site for the benefit of the city and its citizens. We believe that its development is the next big thing happening in Bucharest as it expands the city with a district that offers office, residential and retail spaces along with valuable add-ons such as communal connection areas, green zones and community projects.

We are experiencing a shifting period where sustainable development becomes the best option for going forward. That’s why we focus on creating an eco-friendly environment for sustainable living.

For a rapid recovery of the residential market, the government should consider extending the VAT of 5%, which currently applies to the amount of 450,000 lei, a low value that no longer helps the final buyer.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

The world is changing and companies are redefining their policies, processes and infrastructure. Although more and more people are working remotely, we believe that the demand for traditional offices will remain constant, but it is likely to suffer in the short term. Companies are concerned about health issues and this will lead to a greater prudence in decisionmaking. This period has also made the potential customer more attentive when choosing their home or future residential investment. People will look for more exterior space than before and that will create a change in the demand of products: houses instead of apartments or apartments with terraces. It is also possible that they will look for places where they can clearly identify a space suitable for working from home.

What is your message to clients and partners?

We believe that everything will recover relatively quickly and we will start over with a new normality to which we will all adapt. We are entering a period of solvency, flexibility and trust, where open and active communication with all customers and partners is essential.

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BUSINESS COMPETITIVE EDGE IN CHALLENGING MARKET CYCLES Market players respond and adapt differently in the current crisis situation, but all seek a competitive edge by reevaluating their strategies and core purpose, finding different means to incentivize and explore their creativity and innovative skills. Below are some perspectives on market changes from one of the largest real estate developers in Timisoara, Western Romania, Vox Property Group, led by Virgil Tornoreanu.

We have adapted measures included in a comprehensive campaign for the return of our tenants in Vox Technology Park office building. We have purchased two thermal body scanners, installed in each of the lobby entrances, measuring employees and visitors’ temperature through an automated method, both entering and exiting the building. This safety measure will also lead to savings for the tenants, both financially and in time, which will no longer need to individually measure the temperature of employees and visitors. Amongst the measures, we will disinfect the HVAC system and will install cleaning and air filtrations devices (nebulizers) in conference rooms. We are constantly disinfecting all surfaces, have installed antiseptic rugs and nano-septic foils for the protections of bars and handles and have placed disinfectant dispensers in all common areas. All the traffic circuits within the building have been redesigned. The employees and visitors will thus enter and exit the office spaces and the building through different access ways. Distancing measures have been implemented also regarding the elevator access, restricting it to two persons, instead of full capacity. All visitors will be handed face masks and gloves. Our goal is not only to ensure the safety of our tenants, but also to provide useful precautionary measures during this period. Even if they may seem complicated at this point, we must all get used to these measures in the following period, without becoming hyper-protective. These are the best measures we can take for the safety of our tenants and employees, including our own – all our offices are in the same building. We’ve been innovating since the design of the building and we will continue to do so, constantly improving the office of the future.

The status of current projects and investments Our current project is the residential building, Vox Vertical Village. This

project is ongoing, as planned, even if the pandemic situation has forced us to adapt the construction rhythm according to the pace of the emergency situation. Moreover, we are not downgrading the project quality in order to save costs. Up to this point,

the prices are unchanged and as Vox Vertical Village has its unique characteristics, we are confident that even in case of a fluctuation of the residential market, the products’ high quality will represent a durable and safe investment, with considerable 55

MARKET PULSE REPORT - JUNE 2020 yields even in unstable conditions. As for future investments, we have mixed developments in mind, which are currently in the design phase and will be announced shortly after approvals.

We will continue to dream, design and build our projects, adapting to current market conditions and fulfilling what we have set out to do from the very beginning.

Advantages going forward Our business as a developer is delivering high quality landmarks, both in the office and in the residential segment. Our main competitive benchmark is the quality of our buildings and customer care services provided, especially for our tenants. Going forward, we expect no less of the stakeholders than to continue supporting our work and help us redefine the urban work and lifestyle in Timisoara. One of our main advantages is that we have designed our buildings with digital features and large spaces, which now prove to be an easier adjustable environment for distancing measures, traffic flows and authentication methods upon entering the building.

The same concept of large spaces and privacy goes for our residential building as well. Vox Vertical Village is practically a vertical city, where residents have generous spaces, large atriums and each residence completely different from traditional residential buildings. Now, even more so, we understand the importance of comfortable living spaces. As for expectations regarding the public sector, Vox Property Group, as any other business affected by the pandemic, we would benefit from their support. This means tax rates adjusted and other benefits regarding green buildings, which in the case of an office building, directly affects the service charge.

Vox Technology Park has a leasable surface of 26,600 square meters and was opened after an investment of 30 million Euros.

The project offers unique facilities, such as the possibility of biometric authentication, electric cars and charging stations for electric vehicles, 700 square meters of suspended terrace and competitive advantages for employees, such as dedicated spaces and showers for cyclists, food court, 2,000 square meter gym, commercial and service spaces.

The project also received the final BREEAM green certification with Excellent rating and an overall score of 86.7%, one the highest ever obtained by a real estate project in Romania.

Transformations and their effects There is a lot we don’t know, but certainly it’s an “all hands on deck” type of situation. The chain reaction of pausing businesses will have a toll in the long run as well. Many businesses have learned to adapt in such a short time, shifting towards digital solutions, rethinking workflow and diving into crisis management. In our sector, digital interaction with B2B customers has gained more importance than traditional channels. Companies shift their resources towards digital solutions, innovations and adapting measures, finding new ways to boost their businesses. Technologically, we will enter a period of telemedicine, paperless bureaucracy, video conferences, webinars, online courses and many more. The HR market will also shift from an extremely low unemployment rate towards a readyto-hire talent pool. This means an ease of pressure for a lot of industries, especially automotive. In the IT & C

Vox Property Group set out its purpose to create for the future, designing iconic buildings that will eventually become legacies.

Yet it is not just about the building. It is about the experience it gives to its inhabitants. The comfort and confidence. This is why we embraced BREEAM sustainability standards as our very own. Developing residential, commercial and business projects according to BREEAM standards is a guarantee of achieving environmental, social and economic sustainability performance.

It also transforms the building into a green environment that enhances the well-being of the people who live or work in it Virgil Tornoreanu, managing partner of Vox Property Group.

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sector, businesses will find new ways to work remotely and expand their human resources. Perhaps the most frustrating and also necessary part will be the privacy and safety measures, for which we have no playbook to go by.

Each company will adapt safety and distancing measures, but how these will work in case of a new virus spike or in the long term, nobody can assume for sure. It is simply an uncharted territory for most of us, where the survival of businesses will truly depend on their capacity of creating new environments, adapting to shifting customer demands, maintaining interaction, launching new business models and creating new and coherent structures with the stakeholders.

The message to clients and partners We have not seen the end of this crisis.

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Vox Technology Park

stand together if we want to succeed.

We encourage business managers to lead with empathy, inspire and build trust with others by finding common ground, to define their organizations’ purpose by embracing a new reality and creating an alignment between people and the organization. We encourage our business partners to

embrace a larger image, to deliver and perform not only because we all need to in order to ensure the survival of our businesses, but to look at things from a different perspective, where we all depend on each other. To our customers from the residential segment, we advise to avoid unfounded assumptions and balance

their investments for the future. For those who seek a more comfortable lifestyle, they will surely recognize the importance of high-quality living space. For those seeking to invest, we encourage them to take into account residential investments which will keep their value even in an uncertain market environment.

Vox Property Group is also developing Vox Vertical Village residential project, located in the near vicinity of the office project.

Vox Vertical Village represents a premiere concept on the Romanian market, being the first ‘vertical village’ developed in Romania.

The project is due to be delivered at the beginning of 2021 after an investment of 14 million Euros.

Over 1,000 trees and plants are to be planted on the terraces and interior spaces within the project.

Vox Vertical Village 57

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DESIGNING THE NEW DIFFERENCE “This crisis and especially the long time spent at home only reinforced the importance of the space in an individual’s wellbeing” – Diana Calfa, Managing Partner, Morphoza.

What type of adaptive measures the company/ your projects needed? What were the lessons of this period?

This period had its challenges, but in these times of crisis we learnt to trust, adapt and innovate. With an experience of over 15 years on the market, our company managed to overcome a similar crisis, in 2008 - a moment that helped us rethink our services and become more competitive. Facing this global pandemic, we realized that, once again, we will have to set the stage for „a new normal” - for both our team and our clients. So, we started working on a new entity within Morphoza that would use, on one hand, the creativity of our architects to develop our very own custom-made office furniture range and, on the other hand, our experience in interior design to provide a selection of the most appreciated furniture solutions from our suppliers. We have also streamlined our internal procedures so that, after this period, we will be able to respond faster to the market challenges. Moreover, we used our experience of over three years in organizational transformation and adapted our approach to the new context, in order to help companies get prepared for the change and make the most out of it, since we strongly believe that an efficient change management process will become crucial for the organizations in the following period. But, by far, the most challenging and rewarding project we worked on during this period was our new showroom, located in the Hexagon Office building in Cluj-Napoca.

This crisis context allowed us to design our new office in a way that makes our employees feel safe at work and

challenged us to explore different design styles that will work for every office. All in all, we think that our new location will serve as an inspiring, safe and creative environment for our teams but also as a valuable example of an efficient postpandemic office design for our customers.

What is the status of your current projects and investments planned for 2020 - 2021?

We’re still moving forward with our current projects and we’re also getting ready for new, challenging and interesting ones. This pandemic showed us that we can actually make distance work and we were happy to see so many of our business partners and clients sharing our vision. Nevertheless, for one of our new office projects, the social distancing requirements forced us to rethink a part of our organizational transformation methodology, which was focused on in-site observations on how people interact with the workplace. As our client’s team was no longer working from the office, we managed to find other creative ways to collect the needed information in order to define the impact of the office layout on people’s daily work activities.

Which are the advantages of your business and products, going forward?

What are your expectations from the public sector, state projects to support future business?

We never pass on a good challenge and every time the market situation changes, we use this context to continuously innovate our product and service mix as well. Our main advantage has always

been the adaptability - a trait that also reflects on our projects, which keeps us competitive and relevant in this evolving marketplace. We were also glad to see that the public sector in Romania, like those all over the world, comes with initiatives designed to support companies - the IMM Invest program being one of those - and we are confident that these measures, in conjunction with a solid control plan for the pandemic, will help us reduce the economic impact that this period had both on our sector and the state economy in general.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

This crisis and especially the long time spent at home only reinforced the importance of the space in an individual’s wellbeing. We anticipate that our business sector is one of the main actors on the stage of helping companies embrace the new normal. Of course, like after any crisis, it will take a certain period of time until we’ll start to feel an improvement in the economic sector, but we think that, from now on, changing before they have to will become a priority for many organizations.

What is your message to clients and partners?

Every crisis provides opportunities for innovation and this one is no different.

We encourage our clients and partners to seize the moment and venture fearlessly on the new journey that lays ahead. Together, we can make the difference!

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WE ARE ALL COMMITTED TO FIGHT AND OVERCOME THIS CRISIS AND I AM CONFIDENT THAT TOGETHER WE WILL GET THROUGH THIS! We continue to monitor the investment market for investment opportunities, and we may decide at a later stage to pursue an investment with particularly attractive potential returns - Dimitris Raptis, Co-CEO & Chief Investment Officer Globalworth.

What type of adaptive measures the company / your project(s) needed?

First and foremost, in terms of safety and well-being, we comply with all the norms and we have taken all necessary and appropriate relevant measures in our portfolio, especially in the common areas where the risks are highest. We have heightened the measures in all our office buildings, and we have also implemented a strict daily cleaning program. All surfaces with high traffic, such as receptions, stairs, lobbies, elevators and toilets are disinfected with a special product that destroys viruses, approved by the relevant authorities. These spaces are being cleaned every two hours. In addition, Globalworth has placed dispensers with alcoholbased disinfectant in all its lobbies.

On all our screens we show videos with hygiene tips and measures that each of our tenants should follow.

As strict lockdown and traffic circulation measures are being lifted, we have also devised a comprehensive plan and set of recommendations for our tenants as more and more of their employees will return to the office.

From a costs and cash flow protection perspective, we have been implementing many significant measures and will continue to do so on the basis that this crisis may be unprecedented in terms of both severity and longevity.

What were the lessons of this period?

We have learned a lot and there is still a lot to be learned. We are facing a truly unprecedented crisis and perhaps one of the most important lessons is how to stand together in this fight. We are taking all the proper measures and we do everything we can to safeguard the business and support the real estate industry, but above all these, we should show that we care and support each other. We build offices, we build communities, and we are here, ready 60

to reinforce the sense of solidarity around our community. Therefore, the Globalworth Foundation is strongly involved in supporting the fight of the epidemic in both Poland and Romania. So far, our foundation has allocated Euro 600,000 to assist

hospitals and related staff in both countries who are in the frontline of this unprecedented fight putting their own health at risk. We are all grateful and appreciative for their extraordinary effort and commitment to protect lives.

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Globalworth Campus

What is the status of your current project(s) and investments planned for 2020-2021?

New investment activity is currently suspended. We continue to monitor the investment market for investment opportunities, and we may decide at a later stage to pursue an investment with particularly attractive potential returns. In terms of our ongoing construction projects, all our construction sites are open and functional. We ad here by and monitor all COVID-19 related health and safety measures. We are on schedule with all the planned deliveries, but given the unpredictable situation, we are prepared with different plans and solutions and at the right time we can intervene – depending on how things evolve.

Which are the advantages of your business and products, going forward? What are your expectations from the public sector?

Following the current situation in Romania, we have made, together

with the members of AREI (The Association of Real Estate Investors in Romania), a list of emergency measures to try to better safeguard the real-estate industry during these times. We believe that given the nature of our portfolio and assets, our robust balance sheet and liquidity position, the early and drastic cost saving measures, and the strength and ongoing commitment of all our employees, our business is well positioned.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

There will be a significant impact on the global economy, which will be obviously felt in Romania too. As the situation is still very fluid, we cannot estimate the magnitude of the crisis yet. Therefore, we are prepared with the business continuity for several scenarios. For sure, certain norms and patterns in the office market will change. Working from home

and social distancing may be with us for a long time hence affecting how corporates think about their occupational strategy. On the other hand, Romania and Poland have fared better than other developing markets (especially in Asia) but also many developed too in Europe, and this should provide confidence to multinationals to continue looking at our markets as attractive destinations to establish and expand operations.

What is your message to clients and partners?

The safety and wellbeing of our people, partners, communities, and other stakeholders, continue to be our top priority as we focus on safeguarding our business, protecting our assets, and minimising our exposure to the impact of Covid-19. I am extremely proud and grateful to our teams and partners who work day by day to ensure the business continuity.

Special thanks for their tireless work and efforts so far!

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THE GREAT RETURN TO THE OFFICE. HOW SOON? HOW MANY OF US? If I come to a conclusion after recent discussions with regional leaders in real estate and ITO, is that most companies are in no hurry to return to offices with more than half of their staff before the end of summer 2020.

And why would they hurry? The rules are still not clear enough, we do not know which are mandatory and which are just recommendations. There are some estimates that the set of measures leads to additional costs of about 100 euros/month/employees. The budgetary impact for a company of 1,000 employees exceeds 1 million euros over a year. Money that does not fall from the sky (or from shareholders) and need to be obtained by sacrificing other budget categories, including travel budgets, team-buildings, the CSR activities on which many local NGOs rely.

Basically the „safety package” becomes the only benefit of this period, eliminating other benefits such as fitness subscriptions, office massage, fruit delivered to the office, etc.

It’s as if I see recruitment ads like: „In our company, over 80% of colleagues are not obliged to work from home more than one day a week”; „Here you are allowed to come to the office every day and you don’t have to come with the coffee thermos from home.”

And when we talk about the security package, it is difficult to draw a line between bureaucracy and urban legends, lobbying by interest groups and those common sense measures that can really lead to maintaining and even improving the health of office colleagues.

We start the calculations easily with the obligation to wear masks in closed common spaces which include of course office buildings, whether we are talking about the reception of the building, hallways, elevators, open space, relaxation areas, conference rooms, etc.

At a consumption of 6 pcs. per day (2 for leaving / coming from the office, and 4 to change them every two hours) and at a price that will not return to 20 money we are talking about 6 masks x 0.5 euro x 20 days = 60 euro / month / employee.

We add the increase in the frequency of daily cleaning with accents at the end of the week and month, blocking an additional person in areas of heavy traffic to intensely wipe the handles, buttons, bars, etc. And we can go further: disposable gloves, plexiglass separators, 62

entrance carpets soaked in chlorine (how nice the office spaces will smell).

We do not forget the increase of the service fee due to the more frequent maintenance of HVAC systems and fresh air supply plus investments in extreme measures such as: access recognition terminals facial recognition + temperature detection and mask wear (we just awarded at CodVid Challenge Accepted Hackathon such a solution software); portable thermal imaging devices or only short-distance temperature measuring thermometers; spray disinfection gates for human trafficking; IP cameras with thermo-vision for fever detection, additional man at the reception / guard to monitor this.

The positive part is that most of the IT & Outsourcing jobs will be kept and that the migration of employees between companies will decrease by 100 euros in addition to salary, the security of the job being paramount.

The workload is increasing because everyone is forced to digitize and automate: This crisis will catalyze a major leap with the help of RPA - Robotic Process Automation tools developed by UiPath, the unicorn started in Romania.

The stability of utilities (electricity, internet) and the versatility of the ITO

industry workforce in Central and Eastern Europe is again appreciated by global customers, as South America has recently become very attractive and India has strengthened its leading position in outsourcing.

Only now do we see the advantage that Romania has a well-developed internet infrastructure and that the switch to „work from home” has been made without interruptions in the provision of services.

And this in the conditions in which last year, with an average download of 21.80 Mbps, Romania dropped 32 places in the Worldwide Broadband Speed League ranking, up to 38th place.

The hardest part will be forgetting the fear of ordinances, messages of public interest (media, social networks, megaphones and police cars). Iulian Anghel states in an article in Ziarul Financiar that „It will be difficult for companies, even if employees return to construction sites or offices. There will be fear of each other and the trust of the past will be extremely difficult to regain.” #Iasiishere Dan Zaharia, senior consultant at Extind Romania published with the consent of www.pinmagazine.ro photo credits - Birds Eye View BEV WWW.TRANSILVANIABUSINESS.RO

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WE ARE NOT IN THE SAME BOAT, BUT WE ARE IN THE SAME STORM! “All of us, landlords, tenants, companies, regular citizens, authorities, are in the same storm, trying to navigate the current situation trying to chart a course in these uncertain times. Hopefully, we will make it to safe harbor together”, Bogdan Jigman, managing director, GTC Romania.

Our priority remains, as always, to protect and grow our business in Romania and in the region, by delivering on our commitments to the key stakeholders. Our shareholders, who want to maintain and increase the

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value of our portfolio. Our financing banks, who want to make sure that their investment in our business is safe. Our employees, who want to feel safe and secure on short term and on the longer run. Our tenants, who want to get the

best office and commercial spaces and at the same time feel that they have in us a reliable partner. Of course, it is not always easy to balance all these objectives and keep everybody happy. The current situation poses unprecedented challenges to the business environment, both short term and long term. Short term, people naturally and thankfully focus on the #stayathome instructions from the authorities. This affects business to different degrees, and we see it also in the activity of our tenants. HoReCa locations were of course affected the most. Other companies were affected to a lesser extent, though they also found out that their employees can, at least short term, work from home and not from our fully functional office buildings.

For our part, our employees currently work predominantly from home, though for some cases, we do have employees working from our office. We constantly analyze the situation of our buildings, the activity of our tenants, how each particular case is impacted by the current situation and developments. We try to be as accommodating as possible to tenants’ requests, though it is not always easy, since as mentioned, we do have to be mindful of our shareholders and our financing partners interests. Longer term, some people talk about “getting back to normal”, others about the “new normal” and I think that it is too soon to say how this “new normal” will look like. We will monitor both our portfolio and market dynamics and adapt to the new reality.

For us, this is the most important lesson of the current situation, that we need to adapt fast, efficiently and, hopefully, with minimum costs. Some are already talking about “new ways of working”, “remote work as the new norm” and are touting the office space as outdated.

Personally, I think that we still need to see how the situation will evolve. There are advantages to remote work, though I believe this is not a one-size-fit-all solution and smart and efficient office space will still be required in the future.

For example, if we look at the “social distancing” concept, offices will require a re-thinking effort to comply with the authorities’ recommendations. Also, in terms of lessons learnt, and certainly this applies to a significant number of landlords and tenants: always be mindful of force majeure and hardship clauses in WWW.TRANSILVANIABUSINESS.RO

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the agreements.

Status of investments planned for 2020-2021 Our focus in 2020 and 2021 will remain in optimizing our current office buildings portfolio. We will consider the short- and longer-term effects of the pandemic on the office space demand and adapt. This means that we will invest in our existing buildings (changes required to meet “social distancing” guidelines or similar preventive measures – and that we will adapt our pipe-line projects to the demand – e.g. different office concepts). We remain committed to the Romanian market and trust that the office space demand will be resilient and recover.

Which are the advantages going forward? What are your expectations from the public sector, state projects to support future business?

This may sound like a cliché, but in real estate, the advantage is location, location, location. Our portfolio consolidated in the CBD and northern area of Bucharest is also top level in terms of amenities and we continue to invest in the upkeep and upgrade of our assets. We also have a solid reputation in Romania and the region – GTC started business in Romania 21 years ago. We have a history of developing and operating office buildings, before and after the 2008 crisis. We went through some challenging times, adapted, survived and thrived and are determined to do so again. Always, we had to develop and maintain good relationship with our partners, specifically our tenants. We will leverage on this and hopefully reach a win-win solution to whatever challenges the current situation will bring. In terms of expectations from public sector, we would expect the authorities to act in a predictable and fair manner and consider the interest of all involved parties before issuing regulations. We understand that the priority is, as it should, to protect the public health.

However, some regulations do not seem to take into account fully the business impact. One example is the

City Gate developed by GTC Romania

government ordinance providing for the possibility for certain business to suspend payment of rent and other legislative projects that would be enabled. The intention is probably a good one - to provide some relief to tenants and support to landlords, but the current set up is more confusing than helpful and also sets-up some expectations to tenants. Long term, we would expect authorities to provide incentive measures to businesses so that they can survive and recover. As landlords, we are only as successful

as our tenants, so we hope that the authorities would provide stimulus to struggling businesses.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

I believe it is still to early to speculate on the structural transformations that the Covid-19 situation will generate, though there will undoubtably be transformations. We should first see how businesses and people will 65

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City Gate developed by GTC Romania

deal with the lockdown relaxation planned for second half of May, how everybody will adapt to the “new normal”. For the real estate industry, we will have to see the development of the underlying demand for office space and I believe that the demand will resist the challenges, though in a different form. For example, some analysts are anticipating a possible normalization of the “remote work” approach, affecting more than 20% of the employees. Some would be quick to believe that this would lead to a 20% drop in the demand for office space, but this is not necessarily true, particularly short term. Some

people will still have to come to the office or want to come to the office and those people will need different offices. Open space office – currently favored by many companies – may require substantial transformation.

Some analysts are talking about a change in residential developments (e.g. apartments with “home offices” that would accommodate the remote work, but another solution could be individualized offices that are closer to people’s homes or offices integrated in residential developments. Another example, short term, access to public transportation might be less of a

Premium Point owned by GTC Romania 66

factor than parking spaces / access via personal car, since people might be reluctant to use crowded public transportation. Still, we would need to see if this becomes a longer-term trend and impacts the design and location of office developments. In terms of human resources, I believe that the way companies treat their employees now will be very relevant for the ability of those companies to attract, retain and use talented people in the coming years. With this in mind, we tried to protect our employees as much as possible in these challenging times and will continue to do so. From an economic perspective, Romania will need to restart the economy as soon as possible and banks will play an important role in this. I hope they will manage to identify the bankable projects and reach a balanced view on the applicable interest rates.

What is your message to clients and partners?

We keep a very close relation with our clients and partners, so I hope most of them know the answer to this question already. Though this situation is challenging for everybody, we trust that we have the ability and flexibility to adapt. We face similar challenges and we will meet these challenges together. Sometimes interests may not fully align, and sometimes we will not be able to provide solutions to everything, but most times, together we will find a solution.

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THERE IS ONE FOR ALL “The workplace has been the main topic on the agenda during these days. We expect companies to establish clusters in key locations from the big cities to have employees working close to home� - Mihai Paduroiu, CEO, Office Division, One United Properties.

What type of adaptive measures the company / your project(s) needed? What were the lessons of this period?

Our management team focused on two main directions: helping the medical system and adapting the workflow to assure business continuity. One United Properties has succeeded to raise 300,000 EUR together with individual shareholders and other partners, the sum being donated for the fight against COVID-19.

We have limited social interactions as much as possible and we have adapted using various tools that allowed us to be in constant contact with colleagues and ensure a productive workflow during this period. Beginning with 15th of May we resumed our activity at the office, implementing all the necessary sanitary and safety measures.

What is the status of your current project(s) and investments planned for 2020-2021?

Constructions works have continued on all our sites, with all the necessary safety measures being implemented.

On the office sector we have three construction sites: One Tower, part of One Floreasca City mixed project on the former Automatica plot at the crossroads of Floreasca and Mircea Eliade, One Cotroceni Park, on the former Ventilatorul plot, on Academia Militara metro station and One Verdi Park, on Barbu Vacarescu boulevard, just across the park with

One Cotroceni Park

the same name. All of these are mixed projects, combining numerous functions and facilities for a plus of quality living and smart working. One Floreasca City will be delivered at the end of this year, while delivery for One Cotroceni Park and One Verdi Park is scheduled for next year. In addition, One United Properties has another three residential construction sites opened: One Herastrau Towers, on Nicolae Caramfil street, Neo Timpuri Noi in Bucharest and Neo Mamaia, all of them going on as scheduled. The company also plans to start construction sites for Neo Floreasca Lake and One Peninsula this year, and as our developments are authorized, we will provide details about them.

Which are the advantages of your business and products, going forward?

What are your expectations from the public sector, state projects to support future business?

One United Properties launched in 2018 the office division with the aim to innovate the classic real estate developments.

Our concept consists in flexible office spaces, which facilitate access to green areas and offer a variety of services regarding the health and well-being of employees, built according to the latest technological standards. Such top-quality developments, with numerous amenities and services, will be in demand on the long run. The work from home model

is suitable for long term performance.

The flexibility and adaptability of new, modern and certified office spaces represent a main benefit in the process of re-calibrating the work environment to the new reality. As for the public sector, infrastructure needs urgent investment to create a healthy foundation for foreign direct investment, which generates value in the local economy and new jobs.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

The workplace has been the main topic on the agenda during these days. The flexibility and adaptability of new, modern, and certified office spaces represent a main benefit in the process of recalibrating the work environment to the new reality. The mixed projects offering living, working and entertainment options will be in big demand in the near future, making it easy to work near home. We expect companies to establish clusters in key locations from the big cities to have employees working close to home.

What is your message to clients and partners?

We are the most dynamic real estate developer in Romania, with six ongoing construction sites. All of them are advancing and projects will be delivered according to schedule, at the same quality standards imposed by One United on the market, so book a tour soon!

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CLUJ BUSINESS CAMPUS READY FOR A NEW CHAPTER “We’ve been preparing for the return to the workplace since the beginning of the lockdown. Even though the return will happen in waves, we are aware that it is a stressful subject for all our tenants and their employees. Therefore we’ve been proactive, helping them not only by assuring a healthy and safe environment for everyone, but also in planning their own paradigms and even behaviors and protocols”, Vlad Buzoianu, CEO – Cluj Business Campus.

We have tried to understand what will be important to us people in the post-COVID world, address those expectations and adapt our buildings accordingly. Besides the intensified cleaning and sanitizing protocols, we focused on the indoor air quality. We redesigned the air-filtration systems to bring 100% fresh air into spaces, added UV lights to purify the air influx and increased the regularity of the HVAC system maintenance works.

To really help reduce the spread of the virus in the campus, we invested in body temperature sensing security cameras designed to rapidly prescreen individuals before they enter each building. Another important measure is that we’re currently discussing a potential collaboration with Telios to offer telemedicine services to all members of our community later on, in 2020. Our protocols also forbid access in our buildings without wearing PPE, but we hope this is already a commonsense measure of personal protection for everyone. We have also sent all our tenants guidelines for what makes a workplace safe and provided ideas they can adopt now as the first wave of employees return to the office in a responsible way that looks ahead to the near and far. We believe that all these initiatives will strengthen the confidence of our community that we are taking all possible measures in our power to assure an environment which promotes health, physical and emotional wellbeing now more than ever before.

What is the status of your current project(s) and investments planned for 2020-2021?

Fortunately, even if everything seems to be uncertain, we are glad to announce that the date of completion for the entire Cluj Business Campus project remains unaffected - 1st of September. The 3rd building is already finalized and our tenants are already 68

developing fit out works inside, but until September 2020, we will make sure that all the details have been covered, including the outdoor works.

CBC is a mixed real estate project, developed during the last 7 years,

which includes 3 office buildings, with a total renting surface of 30,000 square meters, 180 apartments and diverse business and after business services such as: bistro, gym, interior park, kindergarten, private school, IT WWW.TRANSILVANIABUSINESS.RO

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Cluj Business Campus

school, panoramic rooftops, coffee shops, sports pitch, charging spots for electrical cars. A total investment of 25 mil. Euro. Regarding future investments, I can assure you that our plans for development remain the same, although I would like to keep them secret for the moment, as there

Initial response Even before the Coronavirus disease started to become a serious threat in Romania, we’ve implemented a strict cleaning routine in our buildings and have placed in all the reception areas dispensers with alcohol-based disinfectants.

I am very grateful to our teams and partners who were present at the office each day to ensure that the buildings remain safe for our colleagues and tenants. When the first official cases were announced, before the lockdown, we decided to close the CBC Fitness Corner gym and the CBC Bistro. Things evolved quickly, but we’ve made all the efforts to remain close to our community, even in the social distancing context.

is no official announcement yet. As a sneak peak, I can only say that we’re planning to take the idea of community to a whole new level, throughout a new business campus, located near Cluj, in the middle of nature, and surrounded by a wake-boarding lake and many other facilities. This image For example, our colleagues at the gym were among the first fitness trainers in Cluj-Napoca to offer daily free online trainings in order to keep the community members active while working from home. For the CBC management team, caring for our community - not only the CBC community, but also the local one was always one of our top priorities.

Therefore, we joint forces with the Beard Brothers NGO and donated 10,000 Euro to reduce the side effects of the pandemic on the local health system. This contribution was intended also to encourage other companies in our business community to act and support our common interest in these difficult times, Vlad Buzoianu, CEO – Cluj Business Campus.

motivated us to keep on doing our best and keeping our standards high even in these difficult times. Now, more than ever, we believe that our own way of doing things in the real estate sector and our coming project will embody the future of workplaces.

Given the pandemic situation, there’s little chance we will be able to organize the inauguration party we promised for CBC or the launch party for the new project, but I am confident we will come back stronger after defeating this coronavirus. And I promise we will catch up with the partying.

What is your message to clients and partners?

As we’ve always said, the wellbeing of our CBC community is our priority, now that we have built a community on entrepreneurial spirit and shared values. I can confirm that CBC will continue to anticipate the needs of our tenants and employees as people return to the office. We will constantly adapt our strategies to respond to this complex issue and always be there for our tenants so that, together, we will thrive in this normality and the next one.

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HIGH QUALITY BUILDINGS BETTER WITHSTAND A CRISIS White Star has been present in Romania since 2006, its most prominent project being the Lakeview office development in Bucharest. In September 2019, White Star together with an US based endowment fund acquired Liberty Technology Park, a former industrial site from Cluj-Napoca converted into an office development project.

Details about the new phase of development and market perspectives are offered by Emilian Balan, Managing Director, White Star Real Estate, Romania.

What type of adaptive measures the company / your project needed? What were the lessons of this period?

The Covid-19 crisis is something that a few months ago nobody expected, nor had anticipated the impact a pandemic like this could have on businesses. The first measure our company took were health and safety measures for our employees and tenants. This included increased hygiene and sanitation measures. For our company we very quickly boosted our ability to work and collaborate on-line, putting to test IT systems we had fortunately upgraded to a little over a year ago. The other major adaptation we made was to help our tenants ensure they could use their premises if they wanted to. For example, throughout our properties in CEE we helped food service providers install take out windows, implemented steps to manage incoming mail, and coordinated deliveries with suppliers.

As the work from home initiative was fully set and the end date unclear, we took steps to protect the buildings by reducing energy consumption and protect unused equipment, plumbing systems, ventilation, etc. The main lessons learned is that being prepared, and having a good channel of internal communication is vital. Although the risk of a global pandemic has been foreseen by specialists and international organizations, the governments and society in general were not prepared for this, with measures varying substantially from country to country. During such periods it’s critical to continuously monitor the situation and maintain excellent communication with all the participants in the daily life of the commercial properties: service providers, local authorities, tenants, lenders, architects.

What is the status of your current project(s) and investments planned for 2020-2021?

We planned to start the new phase of development at Liberty Technology 70

Park in late 2020. We still aim to kick-off the development as soon as we finalize the planning and permitting process for the residential and office buildings planned on Liberty site.

In the meantime, we will vigilantly monitor the evolution of local and external markets so as to be prepared for different scenarios. Depending on market conditions we have the flexibility to either accelerate the development plan or spread the construction of buildings over a longer period of time.

Which are the advantages of your business and products going forward?

What are your expectations from the public sector, state projects to support future business?

Always our main competitive vector is the quality of our products and services. High quality buildings managed with due care and intelligence are able to better withstand a crisis. We do not underestimate the challenges

of this period, but this is a good opportunity for us to differentiate our buildings from other properties and to exhibit our expertise in the real estate sector. Looking at the public sector, most of the times the public authorities are behind the trends which occurred in the economy and I don’t expect this time to be different.

The good part of the pandemic crisis is that it forced the public authorities to speed up digitalization of public data and procedures, and to implement modern interfaces between the authorities and the public. Such procedures and modern tools will help the business environment to work more effectively and efficiently.

From another perspective, I’m afraid that the public sector is not able to inject substantial “fuel“ into the economy, as considering that the budget inflows are shrinking rapidly and the government’s main task is to obtain financing of the state budget deficit. I expect that sooner or later the WWW.TRANSILVANIABUSINESS.RO

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The layout for the expansion of Liberty Technology Park, Cluj Napoca

government will be forced to increase the taxation level and reduce the costs, which will limit its ability to make investments that stimulate growth.

What transformations you expect in your sector, their effects for the Romanian economy and in a regional perspective?

In the short term we’ll likely observe a downfall of the demand, particularly on the residential market. The volume of transactions in 2020 will fall as a result of the uncertainty for most of the population. However, the prices will not go down so much because the cost base remains unchanged. One of most challenging sectors will be retail buildings, especially those in the shopping mall category. The effect of the sanitary measures imposed by the government, combined with the stresses on the retail sector over the last couple years, will require owners and tenants to agree on special commercial terms until the measures are removed, and the economic effects stabilize. Warehouse properties seem to be the best placed during this period. The pandemic boosted e-commerce business in Romania, generating additional demand for warehouse spaces. This evolution will probably continue in

the next years, with the only bottleneck being the poor infrastructure.

The office sector is pretty stable, with minor corrections on a short term.

In the long run, many companies may redefine their strategy with regard to the management of human resources and office spaces. On one hand work-from-home will probably be applied to a larger extent than in the past, on the other hand to keep a safe distance between employees, tenants will have a lower density of people in their offices, meaning more space is needed per person.

White Star Real Estate is a wellknown, international real estate company with a first-class track record. Its team has been active in Central and Eastern Europe since 1997, leading the completion of over 50 development projects throughout the region. These projects include a large portfolio of landmark office buildings, as well as warehouse, retail, leisure and residential properties.

White Star Real Estate is also an experienced asset and property manager, providing services to its clients for over 2 million square metres of commercial properties.

Technology plays an essential role in the design of future office space and our company has already invested significant resources in creation and implementation of high-tech solutions for our buildings. The main challenge is the unpredictability of the pandemic and of its consequences on the economic environment. In principle everybody is expecting to return to pre-pandemic activities within 2-3 months from lifting the health and safety restrictions.

However, in practice, for some companies could take much longer to reach the pre-pandemic levels of activity.

What is your message to clients and partners?

Regardless of the sanitary and economic challenges we aim to keep the same level of service and to realize our development plans. The fundamentals of success reside in how people manage to behave during the crisis. We are confident that the current difficulties will disappear in the following months and the markets will restore their functionality, therefore we will press forward and focus our efforts on meeting the highest standards of quality in everything we do.

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BUSINESS SERVICES SECTOR IN ROMANIA ESTIMATES REVENUE GROWTH OF UP TO 5% BY 2020 The business services industry has quickly adapted to the situation enforced by the Covid-19 context, by implementing telework. Even the outsourcing concept intrinsically is based on this. There are activities that are done by definition remotely.

Teleworking has been in recent years one of the most attractive benefits in this industry, granted to employees in Romania, before the Covid-19 pandemic. Thus, 71% of companies offered their employees the opportunity to work from home, at least one day a week. In the coming period, the employees of the companies in the industry will continue to work from home, while the office space will be reorganized in accordance with the rules of social distancing, becoming more flexible and, at the same time, respecting all sanitary measures imposed by the authorities. In Romania, the business services industry will record an accelerated growth in the medium and long term. The cost pressure that the global economy will experience is also financed by the savings that the outsourcing industry can produce. „For this year, in an optimistic scenario, we estimate in Romania an increase between 0% and 5% of the business services sector.

Most services will stagnate around the current level on the short term (e.g. financial-accounting services, HR or certain back-office services).

On the short term, it is possible that the customer services for tourism and transportation will even register a steep increase in demand (due to the cancellation of reservations), and in the medium term they will experience a possible significant decrease. But this decline can be compensated by the increase in customer service and logistics services dedicated to e-commerce, for example. IT services can also grow, automation and development of artificial intelligence solutions, as well as integration solutions being accelerated by the context of the current crisis. For some HR services, a more difficult period may follow, because the training and, especially, the onboarding of new employees, are more difficult in the online environment and will probably have a lower demand. But companies could choose to reduce budgets in their 72

Dragoș Ștefan President of ABSL Romania

countries of origin and provide certain activities in alternative locations, as cost/employee in Romania is still attractive compared to Western Europe and America. Thus, it is very possible that our sector will not be significantly affected by the current crisis, but there are also more pessimistic scenarios”, explains Cătălin Iorgulescu, ABSL Vice President.

The sector continues to grow In the current context, the number of employees in the industry may increase this year by up to 5%, the biggest challenges of this period being related to remote management and to the fast allocation of the daily tasks.

Companies are orienting to high value-added services, especially in the context of industry automation. The role of Central and Eastern Europe in the business services sector is growing in a post-pandemic world. The business services sector continues to grow through companies in the market and through new projects. The most recent study of the industry in EMEA shows that this year the industry will register a slight growth of 1 - 5% and in the in

the medium term it will register an increase of up to 10 or even 15%. This situation also valid for the Romanian business industry services. According to the report, Poland is the most developed market for the EMEA business services industry, with 1,400 companies in this field and 330,000 employees. The most important customers come from SUA (22%), the Nordic countries (10%) and the UK (7%). The most common services requested by customers are financial / accounting, software development and HR. In Poland, the gross annual wage in euros for a junior in finance or accounting starts from 9,000 EUR per year, for a customer service specialist from 8,400 EUR/year, for an IT specialist - from 11,200 EUR/year. Wages vary according to the experience and skills and can reach a higher level which varies between 18,000 and 60,000 EUR/year.

According to the study, the potential of the Polish market is 400,000 employees until 2022.

2% of Romania’s GDP From the point of view of the revenues generated by this sector, the Romanian market is on the second place in Europe.

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According to estimates, the business services industry generated, last year, a growing revenue, of over 4.5 billion euros, thus reaching approximately 2% of Romania’s GDP. The sector includes 280 companies and over 131,000 employees, i.e. approximately 2.4% of the total employees in the Romanian economy. 79% of the clients of these companies come from Europe and 14% from the USA. In Romania, the gross annual wage in euros for a junior in finance or accounting starts at 7,700 EUR per year, in customer service - at 6,800 EUR/year, for a junior in IT - at 10,800 EUR/year. Gross wages vary depending on experience and skills and can reach a higher level which varies between 13,000 and 66,000 EUR/year.

With 112,000 employees, the Czech Republic ranks the third place in the EMEA business services market. The main services provided are financial accounting, HR and IT. Most customers come from the USA and Germany.

The potential of the Czech market is 140,000 employees until 2022. In the Czech Republic, the annual gross wages in euros for a junior in finance or accounting starts at 11,700 EUR per year, as well as for a junior in customer care or HR, while a junior in IT has a gross salary of 14,000 EUR/year. Gross wages vary depending on the experience and skills and can reach a higher level which varies from 21,000 to 47,000 euros / year. „Compared to Poland and other EMEA countries, Romania currently has advantages related to the labour force.

We have the cost competitive advantage, employees speak Latin languages, but also Germans ones, and the market is not yet as congested as in Poland. These are the reasons why industry investors look at the Romanian market. One The Association of Business Service Leaders in Romania (ABSL) is a leading organization representing the business services sector in Romania, gathering high profile companies which conduct business in the area of Shared Services Center (SSC), Business Process Outsourcing (BPO), Information Technology Outsourcing (ITO), Research and Development (R&D) and companies contributing to the sector’s growth.

of the main objectives of ABSL is to promote cities from level 2 or 3. Many member companies of the association have their offices in Timisoara, Sibiu, Cluj, Brasov and Iasi. We would like to be able to expand this list in as many cities as possible, but we also need the involvement of local authorities to create a package that will attract potential investors”, says Dragoș Ștefan, President of ABSL. The study puts for the first time on the map new industries and countries such as Bosnia and Herzegovina, Ukraine, Egypt or Tunisia. „The advantages that these emerging markets can have in terms of labour costs and the relative availability of qualified human resources are offset by the fact that these countries are not members of the European Union or NATO. Imports of equipment are much harder to achieve, import duties are charged and, in most cases, the alignment procedure at fiscal/ legislative level involves quite high costs.

All this reduces the advantages of cost competitiveness”, considers Dragoș

Ștefan, President of ABSL. The EMEA report analyses 18 countries in terms of development potential and is facilitated

by ABSL Poland in collaboration with local ABSL associations, including Romania.

The main services provided in Romania are *: • 80% of companies provide IT services • 66% offer financial - accounting services • 61% provide customer service operations • 50% provide HR services • 45% provide procurement services • 42% - project management services • 38% - business transformation services • 35% - document management services * their total exceeds 100% because most companies in the industry offer several services simultaneously.

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BUSINESSES SHOULD NOT GIVE UP THEIR STRATEGIES, THEIR OWN MISSION “We can consider the current situation rather a signal for turning buildings’ quality criteria from ambition to reference. What we, as real estate developers, can do to contribute to the economic recovery is to provide work, living or entertainment spaces suitable for the current needs of our partners, our tenants. The key word is - flexibility” - Ion Rădulea, River Development CEO.

for sanitizing and disinfecting common and technical spaces, including sanitizing common areas with a higher frequency, disinfecting contact surfaces, installing dispensers with disinfecting soap or keeping tenants up-to-date on WHO and local authorities instructions. What have we learned during this period? I consider that the pandemics have given us the opportunity to truly implement a number of business standards - from the importance of your products’ ability to adapt to customer needs (in our case, the ability to adapt office space to new rigors), to business partners’ relationships being flexible and the capacity of a company to recalibrate facing overnight changing realities.

What is the status of your current project(s) and investments planned for 2020-2021?

Same as during the pre-COVID era, our developments focus on the construction of London and Oslo office buildings, part of the Sema Parc master plan, a project that we can consider the largest urban regeneration initiative in Bucharest. Through London and Oslo buildings, we will deliver over 31,000 sqm leasable area towards the end of Q3 2021, class A offices in one of the most dynamic areas of the Capital, the center-west area. Works on the construction site of the two buildings continued during the pandemics, respecting, of course, limitations imposed by the new sanitary context.

We have tried to optimize the work on site as much as possible so that, at this time, we do not see any obstacles that would delay the initially estimated delivery deadline.

The Light One Office Building

What type of adaptive measures the company / your project(s) needed?

What were the lessons of this period?

The health and safety of both our team and tenants operating within River Development projects have been and are a priority to us, especially now. As for the company, where possible, our team members worked from home. For 74

the rest of them, we tried to provide them with as many disinfecting and protection products as possible. We limited the number of internal face-toface meetings and we conducted the external ones via videoconference. For the already completed and functional buildings in our portfolio, we have taken additional preventive measures

Which are the advantages of your business and products, going forward? What are your expectations from the public sector, state projects to support future business?

I don’t think pandemics dissolved the idea of a company’s headquarters/ office. Most companies and people who have experienced this period are waiting for the moment to return to the office. We can consider the current situation rather a signal for turning buildings’ quality criteria from ambition to reference. What we, as real WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020

estate developers, can do to contribute to the economic recovery is to provide work, living or entertainment spaces suitable for the current needs of our partners, our tenants. The key word is „flexibility” of the space because, beyond the space itself, the fitout stays to the company, but it is the developers’ responsibility to provide a versatile environment. When it comes to River Development’s development plans, this stands as an advantage and we can consider The Light One building, completed last year, a relevant case study, floors being provided with an efficient, cost-effective and versatile space planning, show-cased by the varied mix of tenants, from medical clinic to wellness center or headquarters for an outsourcing company. London and Oslo office buildings, now under development, are set on the same coordinates, as well.

Regarding authorities’ involvement in supporting the business environment, I consider that the most important measures in the current context should oversee a balance between public system needs (that of collecting taxes) and the capacity of private entities to contribute to public expenses at a level equal to the pre-crisis period.

What transformations you expect in your sector?

We will certainly rethink the working environment, considering this both from the employer perspective and from the real estate developer one, as well. Probably, we all became aware these days of the importance of workspace flexibility, how significant this detail is starting with the design phase of a building, be it commercial or residential. When it comes to the office sector, the winning key stands for the spaces that could previously accommodate high density open-space areas and can

now be converted into spaces that respect rigors imposed by the new safety context. We can expect a more flexible schedule of the companies both for remote work or variable hours for coming and leaving the office.

To us, as developers, such a measure translates into a longer daily usage of the building, respectively in the importance of providing an energy efficient building with an optimal service charge. The post-pandemic office will be the one that will effectively mix individual work areas with those for networking and collaboration, but it is to be discussed on a medium-term how will these new trends will be implemented into a proper space. As for the broad spectrum of complementary sectors, it is premature to make assumptions because we are part of a chain with interdependent links and we can relate to economic effects and their impact only after we see a relaxation of anti-pandemics measures.

What is your message to clients and partners?

We are all actors in an unpredictable social and economic context. Even if we do not know in detail what the post-pandemic reality will look like, the key to revival is, most likely, consistency. My message? Businesses should not give up their strategies, their own mission. Only by keeping our business ambitions high can we overcome present moments.

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THE NEW EVERYTHING With massive changes in our lives and businesses predicted for the next decade, trends were analyzed and summarized in international studies or reports, especially the last 3 months.

CBRE Global Outlook 2030 welcomes us to the age of responsive real estate and offers an invitation to explore the 10 ways real estate will be transformed in the next decade. We’ve selected the first 3, the rest are to be discovered.

According to the report, everything we know about work and the workplace will be different in 2030. When, where and how we work will lead to new roles and new kinds of office environments. First, people are already starting to work from anywhere and at any time. But by 2030, even your car could be a workspace. Secondly, an aging population at one end of the spectrum and advanced AI at the other will change our interactions, staffing needs and every other part of the 2030 workplace. Millennials and Gen X will still be in their working prime, and soon they’ll all be joined by artificial intelligence “colleagues,” a scenario CBRE deems “5G+. Third, as the workplace becomes more fluid and complex, companies will need someone in the C-suite to mastermind and manage a more effective corporate footprint. “This is a unique role that is a bit of glue between finance, human resources, legal, operations, procurement and more. — Karen Ellzey Executive Managing Director, CBRE Global Workplace Solutions.

Savills – offices will still play a vital role Despite the success of home working, offices still provide a vital role in culture, community and connection.

The Covid-19 pandemic has the potential to become one of the biggest tipping points for the future of offices, impacting corporate location strategies, office design and management as well as occupier practices. Many corporates have allowed flexible working in some form for years. However, the large proportion of employees working away from the office in the wake of Covid-19 for an extended period may be the catalyst for accelerating flexible working patterns. According to the Savills Global Sentiment Survey of research heads in 31 countries around the world, 84% of respondents expected home working to somewhat increase, the remaining 16% 76

Varso Tower developed by HB Reavis is rising in Warsaw

expect it to greatly increase. Over half expect the use of video conferencing to greatly increase after the pandemic.

But the office will still play a vital role.

Katrina Kostic Samen, Head of Savills KKS Workplace Strategy & Design says: “Workplace change was inevitable.

However, what we expected to evolve over time transformed almost overnight in response to the pandemic. These exceptional circumstances are akin to an elastic band being stretched to its limit; it will go back but not completely. “It will be down to businesses to determine how this evolves but it must be with people at the heart. The role of the office long term is vital to provide what we crave – culture, community and connection, essential after the emotional and physical impact of the pandemic.”

Colliers – EMEA Industrial & Logistics Market Response Even before the pandemic hit the world like a wrecking ball, there were already several issues appearing around the topic of global supply chain. The dependency on China and its huge growth had partially led to a trade war with the US, and within Europe the cost benefits had somewhat started to diminish. This had led many to start reviewing other options, including countries, such as Vietnam, in South East Asia or, bringing it back home

to nearer shores in Europe. The coronavirus has certainly highlighted that although supply chains had reached extremely high and efficient levels of quality, throughput and to some extent cost, there is very little room for error. Many manufacturers and business have had to close their doors to protect the spread of the virus, but others have also had to close as essential materials, parts and products have been held up due to breaks in the chain moving around Europe is quite complicated and is made up of many countries and borders, unlike large countries such as the US and China so, despite early signs of things getting moving again, there are still major delays at borders. Therefore, those relying on a just in time system will need to adjust their time expectations.

These delays are increasingly challenging for those who deal with perishable items, which may well lead to increases in demand for additional units and, for example, refrigerated storage units.

COVID-19 impact on economy and FDI The COVID-19 pandemic is a challenge for the world economy, underlines a WAIPA report. Strict policy measures introduced by governments worldwide to suppress the further spreading of WWW.TRANSILVANIABUSINESS.RO

MARKET PULSE REPORT - JUNE 2020 the virus also mean an unprecedented disruption of the global economy and investment flows. According to the OECD Interim Economic Assessment published in March, growth prospects remain highly uncertain due to the COVID-19 outbreak. The annual global GDP growth is projected to drop to 2.4 percent in 2020 comparing to an already weak 2.9 percent in 2019 (OECD, 2020). This means that the entire world economy could go into recession, as global annual growth below 2.5 percent is often taken as the recessionary threshold for the world economy (UNCTAD, 2020). World trade is expected to fall by between 13% and 32% in 2020 as the COVID-19 pandemic disrupts normal economic activity and life around the world (WTO, 2020). Moreover, the WTO underlines that in case businesses and consumers regard this as a temporary, one-time shock, the chance for a stronger rebound is higher. A prolonged or recurring uncertainty will likely lead to more cautious businesses and consumers.

The pandemic is causing massive disruptions COVID-19 is uprooting economic globalization. With both supply and demand experiencing simultaneous shocks due to containment measures, global production networks are being disrupted on a scale never witnessed before. The pandemic has exposed how globally interconnected the flow of goods and services has become, and countries are now rethinking their international trade strategies to reduce their vulnerability to global economic shocks. Disruptions to flows of foreign direct investments (FDI) — which are part and parcel of economic globalization — are no exception. In late March, the International Monetary Fund announced that investors had removed 83 billion US$ from developing countries since the beginning of the COVID-19 crisis, the largest capital outflow ever recorded (IMF, 2020).

According to the UN Conference on Trade and Development (UNCTAD), global FDI flows are expected to contract between 30 percent to 40 percent during 2020/21. All sectors will be affected, but sharp contractions in FDI are especially evident in consumer cyclicals, such as airlines, hotels, restaurants and leisure, as well as manufacturing industries and the energy sector (UNCTAD, 2020).

The contraction in FDI is going to hit developing countries particularly hard.

The reasons for this are that first, FDI inflows to developing countries are expected to drop even more than the global average, considering that those sectors that have been severely impacted by the pandemic account for a larger share of FDI inflows in developing countries (OECD, 2020). Second, developing countries have become more reliant on FDI over the last few decades.

FDI inflows to developing countries increased from 14 billion to 690 billion US$ (current prices) between 1985 and 2017. This represents an increase from 25 percent to 46 percent as a share of world FDI inflows. The increase in FDI to developing countries is underpinned by a rise in both offshoring and global fragmentation of economic activities, especially within the manufacturing and services sectors. The drop in global FDI is therefore very much related to the disruptions in global supply chains, which we have also witnessed as a result of the COVID-19 pandemic. FDI inflows to developing countries are not uniform in either quantity or quality.

Fast-growing economies in Asia with large populations have been driving the surge over the past few decades, most importantly China, but also Cambodia, India, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Vietnam (this is not to say that Latin America is irrelevant, where Brazil and Mexico account for a large share of FDI inflows into developing countries).

The inflows of investments into these countries are mainly concentrated in manufacturing and services. If we look at dependence on FDI inflows rather than their quantity, African countries enter the picture. The FDI inflows to Africa tell a different story to those of developing countries in Asia. In Africa,

the extractive industries, such as oil and mining, attract most FDI inflows.

This type of direct investments tends to be more volatile, which explains the erratic swings in FDI inflows in the cases of Congo and Mozambique. Ethiopia is an exception with the growth in FDI inflows being largely concentrated in the manufacturing sector.

Medium and long-term recommended actions Expected upcoming decline in FDI means that competition among locations will increase and extra efforts will need to be taken to secure projects. In addition to the immediate risk of decline in FDI and downsizing, IPAs also need to consider long-term consequences of disrupted GVCs. McKinsey predicts a “new normal, a different way of operating” for companies, reevaluating resilience and risk (Sneader and Singhal, 2020). Companies, especially in the manufacturing sector, will likely rethink their location footprints and seek to regionalize or localize their production and supply chains to mitigate risk. Hence, reshoring and nearshoring might become a major practice in the years to come.

Subsequently, digital technology, AI, eCommerce and cybersecurity will likely gain in importance, especially in the realm of services. Due to these shifts, IPAs must rethink their promotion strategies focusing on all four core roles, i.e. investment generation, image building, aftercare, and policy advocacy, and further include technology to remain competitive and to optimize their performance.

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Editorial supplement of ROMANIA’S REAL ESTATE Yearbook 2020 PUBLISHER - MARKET REPORTS Ionuț Oprea ionut.oprea@transilvaniabunsiness.ro +40 721 197 559 Sales Manager Nicolae Pop nicolae.pop@transilvaniabusiness.ro General Editor Ligia Voro ligia.voro@transilvaniabusiness.ro +40 740 686 015 Address Transilvania Business 1 Primariei St., Chamber of Commerce, 2nd floor, room 206.

P.C. 540026 Targu Mures, Mures County CREATIVE DIRECTOR Răzvan Matei office@iq-design.ro +40 745 354 666

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