73% of commercial real estate companies expect deal activity to increase this year – The Diplomat Bucharest


Representatives of commercial real estate (shops, business centers and offices, logistics spaces) estimate, in a proportion of 80%, an increase in income this year compared to 2021, and 73% expect an intensification of deal activity over the next 12 months, according to the Deloitte Global Study 2022 Commercial Real Estate Outlook. At the same time, given that global mergers and acquisitions activity increased by approximately 85% in the first half of 2021 compared to the previous year, 40% of companies participating in the study said that they could get involved in such transactions in the coming quarters.

According to the study, income prospects differ depending on the type of property. Thus, companies that own buildings used in the digital economy (data centers, cell towers or industrial spaces) have even better revenue prospects this year compared to those in other areas. Even office, retail and hospitality respondents showed some short-term optimism.

Under these circumstances, many companies are focusing on renovating properties and reallocating spaces to other uses to maximize their value. However, only a quarter of them are significantly increasing their technology investments to strengthen their portfolio and asset management capabilities.

“The real estate market is generally sensitive to economic conditions and the commercial sector even more so. Moreover, in an environment of high inflation, such as the one we are currently experiencing, real estate attracts funds seeking investments that protect the value of money over time. Therefore, even if the rental market does not develop favorably in terms of returns, investors will seek assets whose value is not eroded by inflation, and commercial real estate may fall into this category. Regarding the local market, after the 2021 record for land transactions, we are planning real estate project developments accordingly. Bucharest continues to concentrate most real estate transactions in Romania (67% of those concluded in the first half of 2021, mainly related to office buildings and hotels, according to NBR data), but the appetite for other regions of the country is obvious,” said Alexandra Smedoiu, tax partner, Deloitte Romania and leader in the real estate sector.

In terms of the workforce, organizations should continue to invest in digital tools to support remote working and focus their recruitment efforts on employees with technology skills, the study points out. Two-thirds of respondents revealed that their company plans to be fully or partially virtual in the future, although more than half believe that long-term remote working will have a negative impact on productivity. In contrast, around 60% believe that a remote work option would help their company attract talent.

Another challenge that companies must respond to in the coming period to meet the expectations of investors, tenants and employees is that related to ESG (environmental, social and governance issues). 60% of respondents believe that ESG initiatives generate new business opportunities for their organization, and half believe that these initiatives give them a competitive advantage.

On the other hand, 80% of companies said they do not have a fully modernized central system that can easily integrate emerging technologies, which limits their progress and their ability to innovate.

The Deloitte 2022 Commercial Real Estate Outlook study was conducted among 400 commercial real estate companies with assets of more than $100 million each, split evenly across three regions – North America, Europe and APAC.

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