“In 2015, investment market in Romania has seen transaction with total volume of Euro 800 million, similar with the record volume registered in the previous year. If in 2014 we saw some atypical transactions, such as the takeover of Real network by Auchan, in 2015, the market was rather balanced and diversified, capable of attracting more interest from international investors. The office segment has generated almost half of the investment volume in 2015; in spite of this, industrial segment was the one with the biggest increase in 2015 compared with 2014, while transactions with retail projects remained rather constant. We expect positive evolution in terms of interest from investors for the real estate market in Romania, especially given the significant premium stock of office building that is to be delivered”, stated Laurentiu Lazar, Director Investment and Valuation Services within Colliers International.
In EMEA, investors continue to focus on CBD areas as main transactions’ generator, but logistics and industrial sector will dominate UK, while continental Europe will focus on shopping centers. There will be slight movement of preferences for investment sectors, so office CBDs are the main target for 71% of investors, 41% are interested in shopping centers, 36% in high street and logistics segment with 32%.
Yields on some of the large markets in CEE reach values below 6% for office buildings, while retail is 4% and industrial and logistics less than 6%. In comparison, Romania still has the advantage of high yields: 7,5% for offices, similar level for retail and almost 9% for industrial & logistics.
“Taking advantage of the positive background created in 2015 and several regional trends that will play in our favor, the capital market for real estate investments in Romania has an important opportunity in 2016 to convert the positive attitude of investors into transactions and strengthen these transactions into sustained market liquidity. This depends on factors that we cannot influence, such as the current volatility across global capital markets, but also on a factor that is well within our reach: the asking price. Yields are decreasing for Romanian assets, increasing their prices, but an accelerated growth of expected price can quickly neutralize the perceived attractiveness by that part of regional investors, still a minority, that got the green light to invest in Romania. Premium yields are important, but the most relevant is the difference between these yields and the average cost of capital, where Romania does not have significant advantage given the current prices”, commented Robert Miklo, Associate Director Investment Services, Colliers International.
Investors’ interest for profitable yields reflects their appetite, encouraged by the good terms for financing lines. In the next 12 months, 83% of investors in EMEA region stated they want financing lines, more than in the past, considering the more stable European financial system, as well as better debt terms.
USA investors are still interested in the potential of Europe, 1/3 having investment plans in the region in the next 12 months, but according to Colliers report, this time, American funds are focusing more on continental Europe than UK.
You can find more information about trends on global investment markets in the most recent report made by Colliers International, 2015 Global Investment Outlook.