“Although transactions initiated in the first half of 2012 were challenged by the current condition of the capital markets, there are still several transactions in advanced stages that are due to close within the next six months. The main focus for investors continues to be well located and well let office products, within this sector the occupier market continues to improve and in 2012 there have been several notable pre-leases that took place”, states Blake Horsley, Director of Investment Services division of Colliers International in Romania.

The number of commercial real estate buildings increased in the past few years in and around Bucharest, but there continues to be a lack of available real estate assets that meet investment funds criteria, thus resulting in subdued investment activity.

Average lease length, an important criterion for investors who are looking for predictable cash flows, was impacted by the economic uncertainty and instability in the leasing markets in the past three years. Hence, 3 year contracts or break options became more common in the market, affecting the attractiveness of office buildings as an investment product. Once the economy becomes more stable, tenants will again be willing to close longer term contracts thus setting the premises for more investor interest and activity on the market. Most investors (and banks) are looking for a minimum 5 year lease contract with a tenant with no break options prior. To ensure investor interest upon exit this needs to become the norm in the Romanian market.

Outside of the record transaction in Timisoara in the first half of 2012, the investment market was quiet with only four deals being closed across the country, due to the adverse investment climate in the country. The acquisition of City Business Centre in Timisoara (‘CBC’) by NEPI represented the only landmark deal in the city and the first Grade A office project that transacted outside Bucharest. The deal involved the takeover of three existing phases of the project as well as the forward purchase of two future phases. The project will total roughly at 45,000 m² of leasable space when the last phase is completed. The CBC project value was € 80-90 million following the final settlement. With this transaction NEPI, represented by Colliers International, consolidated its position as the most active investor in the local market post-2008. Lacking sufficient transaction comparables, yield indications continued to be based on estimates given by current supply-demand dynamics. These estimates were influenced by debt market rates.


Key Investment Figures

H1 Investment Turnover

€90 million

Prime Office Yields


Prime Retail Yields

8.25 – 8.5%

Prime Industrial Yields



In 2012, many private equity funds having Europe or CEE wide mandates – who have historically been the dominant players in Romania,  either reached their investment deadline for deals or filled their capital allocation and have exited the market to raise new capital. Funds may return to the market in 2013 with fresh equity, but with a wider geographic mandate forcing Romania to compete with deals in other countries. In some isolated cases, core funds or asset managers backed by core funds will assess the Romanian market.