"If Great Britain, Germany and France still represent 80% of the real estate market in Europe, the investors interest has increased for the following ten secondary marketsWarsaw, Dublin, Amsterdam, Milan, Barcelona, Roma, Madrid, Brussels, Luxembourg and Bucharest. Last year, several investors have chosen these markets which offer a high growing potential. Therefore, the investment volume has increased with 74% in 2013 compared to 2012 and it is expected to reach EUR 10.4 billion", BNP Paribas Real Estate’s report shows.
"In 2013, the investment market in Bucharest has started to gather momentum with positive perspectives for investors on the medium term. Of course, the increase of 170% recorded between 2012 and 2013 has to be put into perspective with a particularly low investment volume. Indeed, investors are encouraged by a resilient occupier market and by interesting prime yields compared to other CEE real estate markets. However, the limited availability of senior debt remains a major investment barrier, in particular for domestic investors. Thus, demand is mainly sustained by foreign opportunistic funds. The biggest transaction of the year was concluded by NEPI, a core investment fund listed on three stock exchanges: Bucharest, Johannesburg and London, which acquired The Lakeview office building for a €61.7 million", the report mentions.
With some exceptions, like Poland and Romania, the European tier two markets are still weighted down by a challenging environment. This year shows a marginally better prospective, with flat or slightly positive GDP growth. Tier two markets have probably reached a low point in terms of rents and a high point in terms of vacancy rate due to the past, present and future weak volume of new construction.
The spread between office prime yields in core markets of Paris, London and the big four German cities, and tier two markets has never been so high; giving a well-compensated risk for these less liquid markets. The gap between average office prime yields in core markets and in tier two markets achieved an historic high of 160 bp at the end of 2013; while it was bottoming out at 45 bp in 2007.
The value of the real estate transactions in Romania registered last year EUR 335 million, with 10% growth compared to last year. (source: mediafax.ro)