Office market to shine in 2020, with transactions worth over 600 million Euro

2020 is expected to be the best year in the post-crisis cycle for the real estate investment market in Romania, after total investments worth 644 million euro in 2019. Deals worth at least 600 million euro could be finalized this year only in the office segment, which will be the star of the real estate investment market, supported by more attractive yields than in other countries in the region and a good macroeconomic performance, shows the annual report released by Colliers International.

The 600 million figure for office deals refers just to investments in very advanced stages, so it could print well higher by year end; it also includes the NEPI Rockcastle portfolio sold to AFI Europe for in excess of 300 million euro, a deal signed late 2019, but expected to formally close in the subsequent months. Last year, the office market attracted more than 60% of real estate investments, with Bucharest and Cluj-Napoca being the most dynamic cities. The year’s biggest deal was for The Office sold by NEPI Rockastle and local developer Ovidiu Sandor to the Romanian-owned DIY chain Dedeman, for roughly 130 million euro.

Other major office deals included the purchase of America House in Bucharest for over 70 million euro by Morgan Stanley and ADD Value Management, advised by Colliers, from AEW, the acquisition of Phase III of Oregon Park by Lion’s Head Investments, for an estimated 57 million euro. Two other important deals involved the sale of Liberty Technology Park from Cluj-Napoca by White Star alongside the endowment fund of one of the top universities in the US, also brokered by Colliers International, as well as the transaction signed by Corporate Finance House Group, an investor with headquarters in Lebanon, that bought the Day Tower office building in Bucharest, developed by Day Group.

Retail transactions represented nearly 24% of total volumes in 2019. The largest transaction, worth 113 million euro, was made by MAS Real Estate for 8 retail projects it had developed together with Prime Kapital. Another important deal was closed by Indotek Group, which purchased Promenada Targu Mures for an estimated 40 million euro.

The industrial sector showed more modest performance in 2019, accounting for under 10% of the preliminary figures, with CTP’s purchase of A1 Bucharest Park for around 40 million euro as the year’s biggest transaction. In fact, the local market of industrial and logistic spaces has the highest yields in the region, up to 8.25%, compared to 6.50% in Warsaw, 7% in Budapest or 5.25% in Prague.

With some of the highest level of investment yields in Europe and given the volume of over half a billion euro of transactions secured or in advanced negotiation, the volume of real estate investments is expected to exceed 1 billion euro in 2020, Colliers International consultants predict.