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Christian Traunfellner, Immofinanz
There is an increasing need for high-quality office properties»
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Globalworth: The number of green accredited buildings continues to grow every year

Romania today is one of the few economies in Europe that had a consistent expansion over the past six years, outpacing EU average growth, Dimitris Raptis, deputy CEO and Chief Investment Officer Globalworth told The Diplomat-Bucharest.

2018-04-03 16:58:50

"Its attractive macro-fundamentals resulted in the highest economic growth in the EU last year, so there is no wonder that the market is attracting increasing levels of foreign direct investment," said Raptis.

"Regarding the real estate market, it's enough to look at the evolution of the total investment volume in the second half of 2017, when it was 24 per cent higher compared to 2016 and the second-highest figure since 2008, to see that Romania is an increasingly attractive location for real estate investment. Compared to the other countries in the region, the availability of quality product is still relatively low, but improving. If we look on the financing side, over the last few years terms and conditions have improved, getting closer to what the investors could only until now find in the main CEE markets. Class A energy-efficient office properties, which are easily accessible by public and private transport and combine high-quality space with other amenities, are in firm demand and maintain low vacancy rates and stable rents."

In terms of the leasing market, regarding Bucharest, the most sought-after submarkets in Q1-Q3 2017 were Calea Floreasca/ Barbu Vacarescu and CBD (Central Business District) with a leased area representing almost 40 per cent of the total transactions for the first nine months of 2017.

"If we compare these facts with the same period of last year, we can notice the difference in the areas that were in high demand: over 76,500 sqm in Centre-West and over 40,000 sqm in Dimitrie Pompeiu," said Raptis. "As expected, the IT&C sector still covers most of the demand on the market, occupying approximately 125,000 sqm (56 per cent of the entire take up of the analysed period), compared to the 40 per cent of Q1–Q3 in 2016. We strongly believe that developing, acquiring or managing green, environmentally-friendly buildings and promoting healthy environments is not an option anymore, but mandatory. Creating an environment in which people want to work, investing in energy efficient properties, giving back to local communities, investors, tenants, partners and the people who work in or live nearby the buildings are mandatory objectives. And there is no better way to achieve this than by building a "greener" and more environmentally-friendly portfolio."

According to Raptis, reports show that the number of green accredited buildings continues to grow every year, and it's a known fact that the growth will continue to remain strong in the coming years for most countries: "Whether we talk about developing new buildings or about improving the existing ones, companies dedicate their efforts to achieving LEED Gold, BREEAM Very Good, or higher accreditations and to ongoing investment in their properties to ensure further improvement in their sustainability performance. For example, in our country only during the first three months of 2017, the market for Green Office buildings recorded over 90,000 sqm in new certifications, and we are proud that one of the highlights was the certification of Globalworth Tower (LEED Platinum) - the first building in Romania and the broader SEE area to reach the highest level of Green certification for a core & shell project."

Raptis underlined that Romania benefits from very positive macro-fundamentals, such as a young and skilled workforce at attractive cost, a low and stable tax environment, and perhaps most importantly significant EU and Romanian government subsidies and grants: "Growth is underpinned by European Union grants and subsidies, which have been made available to the country since its accession to the EU in 2007. Romania is currently in the second phase of its European funding program, which runs from 2014 to 2020, with 43 billion Euro of approved EU funds expected to flow into the country over that period. Mandatory reserve ratios for banks have also remained flat for both local and foreign liabilities, providing further support to the well-capitalised banking sector. Real estate financing continues to be available for good-quality projects, with increasing competition among financial providers (both local and international) leading to improved pricing and LTV terms for borrowers. All these strengths of the macro-economic environment are reflected in the performance of Romania's real estate sector, with demand for office and industrial estate space reaching historically high levels and significantly outweighing all other demand, driven especially by companies in the IT&C, production/energy and financial sectors, and mainly fuelled from multinational corporations expanding their operations and consolidating their positions."

According to the quoted source, the Romanian real estate investment market remains on an ascending trend, as both the volume of closed transactions and the interest from foreign investors increases.
"Coupled with the strong economy, these investments give us the reasons to expect this positive trend to be carried over into 2018," said Raptis. "The labour market remains one of the most important arguments when it comes to investments, as Romania is one of the few countries in the European Union to have a very well-prepared and cost-effective work force. Moreover, the incentives and grants for companies interested to create job opportunities and the tax system offer a good investment environment. However, one of the growing challenges is that, due to the significant growth of foreign direct investment and expansion by corporations, it is becoming increasingly difficult and more expensive to attract skilled labour. That is why it is now becoming even more important to create a very attractive office environment which offers a host of amenities and a "home away from home" environment for employees. We believe that strong macro fundamentals will continue to benefit Romania's real estate market for the foreseeable future. The new schemes projected to be completed over the next two years are spread around Bucharest and, given the demand for good-quality space, we anticipate that rental levels will remain stable."



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