Cushman & Wakefield: Overview of the real estate market in Romania

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Vlad Saftoiu
Research analyst

The COVID-19 situation in Romania somehow stabilized in early November following a series of restrictions adopted in late October in order to deal with the most difficult phase of the pandemic so far. Thus, the number of daily cases has seen a steady decline of nearly 50%, combined with an increase in vaccinations over the past month, while 35% of the population is fully vaccinated against less than 30% at the end of September, while the booster dose (third) has also already been given to more than 5% of the population.

The Covid digital certificate is now required nationwide to enter shopping malls, restaurants, DIY units and many other indoor spaces and it is still not clear for how long as this measure needs to be extended or not. at the end of November.

Regarding the real estate market, the third quarter of 2021 was an impressive quarter for most segments. For example, we recorded the highest quarterly new office supply ever recorded in Bucharest, as 132,000 m² of office space were delivered during this period, while the take-up Q1-Q3 increased by 33% compared to the same period of 2020, as a cohesive pipeline of approximately 280,000 m² is under construction and is expected to be delivered within 18 to 24 months.

Demand for industrial & logistics space remained solid in the third quarter of 2021, with total rental activity reaching 202,000 m². After three quarters, a cumulative take-up of 562,000 m² was recorded, only 3% lower than the same period of the previous year, with the vacancy rate continuing to decline to less than 5% nationally. In addition, more than 600,000 m² of new spaces are currently under construction, thus preparing the ground for a positive year 2022.

The retail market, even without a robust new offering in 2021, benefits from a pipeline of around 120,000 m² of projects under construction, while developments totaling over 460,000 m² are in different planning stages.

20 october

The number of COVID-19 cases was relatively low over the summer, but the Delta variant became predominant and thus caused an upsurge in infections from September, as an average of more than 10,000 daily cases have were registered in October. In addition, the vaccination campaign has faded sharply since May and less than 30% of the population is fully vaccinated, one of the lowest rates in Europe.

As a result, new restrictions have been imposed in areas with a high incidence of infections, as a Covid digital certificate is required to enter restaurants, cinemas, sports arenas and other spaces, while a large number of schools have also been closed due to the growing number of infections among students and teaching staff.

Regarding the economic environment, Romania is showing resilience after showing growth for 4 consecutive quarters since the third quarter of 2020, with an overall increase of around 7% expected in 2021, the country being one of the best performers of the European Union.

Consumption recovered significantly in the first half of 2021 (+ 13.4% year-on-year), a trend that is expected to continue despite the restrictions.

A number of large investment deals of over € 50m have been closed this year as office yields are expected to record a slight squeeze for prime assets by the end of 2021, while we see more high activity on the part of investors, with a number of pending deals.

The office and industrial market segments remained active throughout 2021, as almost all new projects were delivered on time, while a significant pipeline is expected to be completed within the next 2 years without any delays. significant.

July 27

Romania has seen a significant decrease in new cases of COVID-19 from April and many government restrictions have been lifted in the past two months as almost all indoor and outdoor spaces have reopened (schools, restaurants, cinemas. , sports venues, playgrounds, etc.).

The first quarter of 2021 produced a surprising growth of 2.9% qoq, as an annual GDP increase of around 5-7% is now estimated by the government and analysts, the Romanian economy is recovering more quickly than expected.

The industrial and logistics market was once again the spearhead segment, with total take-up in H1 2021 being 21% higher than in H1 2020, thus confirming its position as the leading real estate sector during the pandemic.

The office and retail markets will register a constant supply in 2021, with most projects to be completed in the second half of the year. Additionally, demand for office space in Bucharest started to accelerate in the second quarter, as an overall increase of over 20% year-on-year is strongly expected in 2021.

Romania still has some of the most attractive returns in the EEC region and market liquidity is also expected to remain healthy in the second half of 2021, the local investment market has produced a number of significant transactions of iconic assets in a period uncertainty over the past 12 months.

April 20

Romania has been on alert since May 15, 2020, it has been extended monthly. Most schools reopened following a decrease in the number of daily infections in January and February, but March saw a new wave of COVID-19 cases. A new wave of restrictions were imposed from April in order to combat this trend and support the vaccination program which has so far only fully vaccinated around 8% of the Romanian population.

The second half of 2020 was very strong in terms of economic recovery, with quarterly GDP growth of 5.6% and 4.8% respectively recorded in the third and fourth quarters of 2020, with preliminary data indicating an annual decline in GDP of – 3.9% in 2020 – a better performance than expected at the start of the pandemic. The outlook for 2021 is rather positive, with GDP growth of around 4-5% estimated by both the government and analysts.

Demand for industrial and logistics spaces remained on an upward trend in the first quarter of 2021, as total take-up recorded an increase of 65% year-on-year, a trend that is expected to continue.

Both the office and retail sectors saw new deliveries in the first quarter of the year, and the new supply will be more consistent in 2021 compared to 2020. In addition, the share of net office take-up has significantly increased in Bucharest in the first quarter. 2020, the market is therefore taking its first steps towards pre-pandemic levels.

Market liquidity has held up impressively throughout 2020 and is expected to remain healthy in 2021 as well, with several large deals expected to close during the year.

January 26

Romania has been on high alert since May 15, 2020, with limited restrictions compared to the previous state of emergency, as all shopping malls, hotels, churches, museums, exhibition halls and public parks have reopened June 15.

After an increase in the number of new infections in October and November to around 10,000 daily cases, new prevention measures were adopted on November 9, which reduced the number of new daily cases to around 3,000 from mid-December.

Several signs of recovery emerged as retail sales recorded a surprising 2.1% year-over-year increase in the first eleven months of the year, while construction work recorded an impressive 17% increase. year-on-year over the January-November period. In addition, GDP growth of 4.5% is forecast for 2021.

The industrial and logistics segment performed exceptionally in 2020, with total take-up nearly doubling from 2019 figures, while new deliveries represented a 30% year-over-year increase.

The office and retail sectors were hit hardest by the pandemic, both registering year-over-year declines in new supply. As a result, several retail and office projects have been put on hold, while most of the developments launched are proceeding as planned.

The investment market was also solid, especially given the CEE / SEE context, the Romanian market being the only one to have recorded growth in 2020 compared to 2019 (+ 28%).

April 30

There have so far been more than 11,000 confirmed cases of the coronavirus in Romania and the country is currently in a state of emergency until May 15. Almost total containment has been imposed to encourage social distancing during this critical time. The president announced that an easing plan will be considered after May 15 if the number of people infected decreases.


In the real estate market, the industrial sector has shown encouraging signs, with demand and supply at almost similar levels compared to the first quarter of 2019, a trend that is expected to continue.

However, all retail projects significantly reduced their activity at the end of March as a precautionary measure dictated by the current state of emergency. Several scheduled deliveries were postponed for the second part of the year.

In addition, while the level of new offices delivered in Bucharest was similar to that of the first quarter of 2019, the rental activity recorded a decrease of 50% year-on-year in the first quarter of 2020.

The most relevant investment deal in the first quarter was the purchase by CTP of Equest Logistic Park in Bucharest, a deal brokered by Cushman & Wakefield Echinox, as the total investment volume increased by 15% on a sliding scale. annual. Otherwise, some important transactions were either postponed or canceled altogether, mainly due to the current climate of uncertainty.

Disclaimer

Cushman & Wakefield plc published this content on November 16, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on November 18, 2021 02:51:03 AM UTC.

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