Colliers: Romania’s leading real estate developers have started to consolidate their land portfolios

Activity in the land market has slowed over the past year, but investor enthusiasm for Romania’s long-term potential remains stable. Demand for strategic land plots, which now can be secured at more interesting terms than in a highly active market, is growing, Colliers consultants explain. This trend is attracting the interest of major developers looking to strengthen their position in the property market.

A recent example is Genesis Property, one of the leading owners, developers, and operators of Class A office buildings, which closed the acquisition of three plots of land totalling 30,000 square meters from Stizo Invest in a transaction brokered by Colliers. The acquisition consolidates Genesis Property’s position in western Bucharest, where the company also owns the West Gate Business District office buildings and the West Gate student complex. Among the active land buyers are also One United, Speedwell, and Kaufland. A notable development compared to previous years is the increased involvement of the Romanian state, facilitated through various entities, in acquiring strategic sites in major urban centers.

“The upward trend in supply continues, as new properties enter the market, while demand is primarily driven by a limited number of potential investors. However, the year has started well, with significant transactions announced across various stages of finalization. We’re witnessing the sale of portfolios such as CPI/Immofinanz’s Rocar and Iride, alongside other portfolios, mostly consisting of residential land, from players who have too much stock and need to unlock or focus on certain projects in advanced stage”, explains Sînziana Oprea, Director Land Agency at Colliers Romania.

Moving forward, the Colliers director anticipates additional valuable land portfolios will become available in the near future. While interest in the retail and residential sectors remains robust, the primary emphasis lies on mixed-use projects, through securing strategically located platforms at competitive prices or attractive transaction structures. Sînziana Oprea highlights that prices are relatively stable, noting a lack of significant fluctuations. However, she underscores an uptick in the flexibility of owners who feel a pressing need to sell.

In the previous year, the volume of land transactions for commercial real estate projects (excluding industrial and traditional warehousing) experienced a decline of less than 10 percent compared to the 450 million euro recorded in 2022, and continues to be considerably above pre-pandemic levels, according to the annual report published by Colliers.

About 70 percent of the land traded comes from Bucharest and its surroundings. Looking specifically at the volume in Bucharest, Colliers consultants noted that half of the transactions came from residential developments, a quarter from retail, and the rest from various types of investors (office, educational, medical) or simply speculative buyers. In the rest of the country, residential also accounted for about half of the volumes, with retail representing most of the difference. Thus, retail transactions were down compared to previous years.

Compared to 2021-2023, Sînziana Oprea believes that appetite will remain subdued in 2024, but this fluctuation is far from dramatic. In addition, a number of major deals are in various stages of due diligence and could be completed in 2024, which could lead to another good year once the line is drawn at the end of the year.