Bucharest residential market, one of the most resilient real estate sectors in the first year of the pandemic: JLL

The fourth quarter of 2020 marked a spectacular return of the Bucharest residential market, with a booming transactional activity registered throughout October – December. Moreover, throughout the year both the development and the transactional activity increased compared to the previous year.

“The drive of the market’s strong performance was led by the transformation of household into a multidimensional space. The buyers were more determined to secure a dwelling aiming to increase their comfort, either by upgrading their existing homes, or making their first residential acquisition”, says Andreea Hamza, senior director Living Department JLL Romania.

In terms of supply, overall, 2020 performed very well considering the general uncertainty caused by the pandemic. 2020 brought approximately 10,000 new units in Bucharest and 3,600 new units in Ilfov county. Q4 2020 alone brought 3,900 new units in Bucharest and 1,060 new units in Ilfov county.

The residential supply in Bucharest was not affected by the pandemic outbreak and remained stable compared to the previous year.

However, the delivery of some projects has been postponed from 2020 to H1 2021 or even 2022, as imposed restrictions led to a slowdown in activity on most sites in Q2 2020. 

There were no major cancellations registered in construction works or deliveries and in the second half of the year we have seen an increased construction activity, as developers launched new phases encouraged by the surprisingly good selling activity. This also motivated them to actively look to secure new lands for future projects.

For 2021, a larger new supply is to be expected, proving once again the resilience of the residential market.

The level of new units transactions in Q4 2020 was situated at approximately 9,000 units for Bucharest and 1,700 units for Ilfov, assuming that 60% of the Bucharest transactions officially registered by the National Agency for Cadaster and Land Registration were with new units, while for Ilfov new sales represent 90% of total transactions. This represents a 69% increase compared to the previous quarter of the year and a 33.5% increase compared to Q4 2019.

For the entire year 2020, Bucharest registered approximately 22,300 transactions with new units, while Ilfov totaled around 5,800 sold units. This represents a 4.5% increase compared to 2019. Despite the pandemic, 2020 was an excellent year in terms of residential transactions.

The residential prices registered a 3.5% increase in 2020 following the same ascending trend started in 2015. For 2021 we would have expected a moderate increase in prices, but due to the one-year  postponement for the implementation of the 5% VAT for the €140,000 extended threshold, we adjusted our forecast into a more conservative approach, therefore we expect that prices will remain relatively stable or register only a small increase in 2021.

Residential prices registered a 1.9% increase in Q4 2020 as compared to the previous quarter, leveling at an average of €1,465/ sqm. After two consecutive quarters which registered small price decreases (below 1%), the increase in the last quarter is a clear sign that the residential market was not seriously affected by the Covid-19 pandemic.