Romania’s real estate investment market poised to hit €1 billion in 2024, reports Colliers

Romania’s real estate market is on track for a remarkable year, with the potential to reach the €1 billion mark in investments, according to a recent report by Colliers. The first half of 2024 saw a total of €419 million in real estate transactions, representing a 2.5-fold increase compared to the same period in 2023.

Colliers consultants are optimistic about the market’s prospects, highlighting a robust pipeline of deals expected to close by the end of the year. Some transactions are being expedited as owners push for swift completions, making the €1 billion target increasingly attainable.

For the second consecutive year, industrial and retail assets have led the market, overtaking the traditionally dominant office sector. This shift underscores the growing importance of Environmental, Social, and Governance (ESG) criteria in investment decisions, as noted by Colliers. While the long-term outlook remains promising, the report cautions that challenges persist in the short to medium term.

“2024 has been much more dynamic compared to last year. New investors are entering the market, and there are more deals in the pipeline with a strong likelihood of closing,” said Anca Merdescu, Director of Investment & Debt Advisory at Colliers România. She pointed out that the cost and availability of funding, currently around 6%, remain key challenges. However, there is an increasing focus on the technical quality and ESG standards of properties, which are influencing financing decisions.

Merdescu added that financing conditions are expected to improve, supported by high liquidity in the financial markets and anticipated interest rate cuts by the European Central Bank (ECB). However, banks remain selective, particularly in the office sector, with industrial properties continuing to be the preferred investment.

One of the year’s standout deals was the sale of Globalworth’s industrial portfolio, encompassing 270,000 square meters of warehouses across Romania, to CTP for approximately €168 million. This transaction is one of the largest industrial deals in Romanian history, second only to the sale of Europolis Park to Singapore’s GIC in 2016. The second largest deal involved WDP’s acquisition of Expo Market Doraly for around €90 million.

Colliers also brokered two significant office market transactions that have bolstered market confidence. The Landmark office park, a 23,500 square meter Class A space in Bucharest, was sold by Cerberus Capital Management and Revetas Capital, marking the most significant office deal in the past 18 months. Additionally, AFI Europe acquired the myhive Victoriei office building from IMMOFINANZ for approximately €27 million, with Colliers and Cushman & Wakefield Echinox serving as co-exclusive agents.

“These transactions underscore the resilience and liquidity of Romania’s office market, despite the broader challenges,” commented Robert Miklo, Director of Investment Services at Colliers. He noted that these deals set a positive precedent for future investments and could attract new investors to Romania.

Another notable transaction was the sale of Funshop Park Turda by Scallier to BT Property for approximately €15 million, signaling the emergence of new types of capital in the local market. The sale of logistics parks owned by Global Vision and Globalworth to Belgian developer WDP further boosted the industrial sector’s transaction volume to over €100 million for the year.

On a regional level, Romania outperformed its Central and Eastern European (CEE) peers in the first half of 2024, according to Colliers’ “H1 2024 Investment Scene” report. While the region saw a 29% year-on-year increase in transaction volumes to €3.3 billion, this still marked a 41% decline compared to H1 2022. The report anticipates that regional transaction volumes will reach around €5.5 billion for the full year, approximately half the 10-year average. Poland led the region, accounting for nearly 50% of the total volume.