New investors increase the competition for the best real estate assets in Romania, says C&W

The local real estate market has attracted in the last five years over 20 new investors from all over the world, the most active of them making acquisitions with a total value of approximately 1.5 billion euros, according to the data of the real estate consulting company Cushman & Wakefield Echinox.

Through the acquisitions made and the assets explored, these investors increased the competition for the best available assets on the market, contributing to a slight decrease in the investment yields, a process that is expected to continue in the following quarters.

In terms of investment volume, the most active new players in the local real estate market have been in the last 5 years MAS Real Estate, Atterbury and Lion’s Head Investments, with South African shareholding, Cerberus, Morgan Stanley and White Star in The United States of America, respectively GIC (Singapore) and CIC (China). From Europe, the local market has attracted new investors especially from the region, from countries such as the Czech Republic (PPF Real Estate) and Hungary (Indotek).

Analyzing the acquisitions of companies that already had a presence on the local market, the largest acquisitions were made by NEPI Rockcastle, CTP and Globalworth, leaders of the retail, industrial and office segments in terms of portfolio assets, together with the local Dedeman group, the leader of the DIY market, which by two acquisitions became a significant player on the office market in Bucharest and Cluj.

“As we continue to see record yields set in Poland, the Czech Republic and Hungary, prime yields in Romania continue to show resistance to any significant compression. There are clear signs that for prime assets below Eur 50 million yields are starting to settle below 7% and we expect this trend to follow for newly delivered, large assets over Eur 100 million within the next 12 months. This steady movement and limited volatility suggests a new level of maturity for this market, offering investors an attractive hedge against other CEE markets,” said Tim Wilkinson, Partner, Capital Markets, Cushman & Wakefield Echinox.

Overall, between 2015 and 2019, 137 transactions were recorded with a total value of approximately 4.2 billion euros, the average value of the transaction being over 30 million euros. The most traded properties were office buildings, with a volume of almost 1.8 billion euros and a share of 43% of the total, followed by commercial spaces, with a share of 30%, respectively industrial spaces (20%).

About 67% of the investments were directed to properties located in Bucharest, with Cluj-Napoca being the next attractive market with a share of approximately 7% of the transaction activity.