This demonstrates the increased interest of investors for the local real estate market, even though last year the volume of transactions was only 683 million euros, below initial estimates. The volume of transactions recorded last year was influenced by the long process of analysis of the projects, the buyers still being very cautious to the investments they make in Romania.
"In the last period, we have managed to convince more and more international investors to look at Romania and this has materialized on the one hand, through a high volume of transactions that have already been secured and are to be completed in the next period. In total, transactions of more than 700 million euros are in advanced stages, and for the whole year it is very likely that the volume will exceed 1.1 billion euros, a record level of the last 6 years, " said Andrei Văcaru, head of Capital Markets JLL Romania.
The increased appetite of investors is also reflected in the evolution of yields over the last 12 months, which compressed by 25 basis points for office and industrial assets, up to 7% and 8%, respectively. The trend will continue this year and is in line with what is happening in the region.
"The spread between yield in Romania and Poland or the Czech Republic reach up to 275 basis points for comparable properties, which means that prices on the local market are significantly lower compared to the region, making investments in Romania more attractive," explained Andrei Văcaru.
Offices in Bucharest, the most liquid assets in 2020
Given the ongoing transactions, in 2020 we expect a strong recovery of Bucharest, which could attract over 80% of the total volume of investments, compared to 48% last year. Secondary cities, which have become more attractive to investors in 2019, will drop in weight as there are fewer projects available for sale.
By 2020, office buildings will represent the most liquid real estate asset class. Moreover, we expect an increase in the share of total transactions to 80%, from 60% last year.
New sources of capital on the market
The analysis of the origin of the capital allocated for property acquisitions in Romania shows a continuation of the diversification of the investors. Last year, local assets attracted South African, Romanian, American, Hungarian and Middle Eastern capital, and this year, we expect Western Europe and Israel to be the main sources.
Morgan Stanley, Indotek, CFH and White Star are among the new investors who made acquisitions in Romania in 2019. (source: JLL)