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The investment market increased by 37% last year, but may see a dip in 2021 as some uncertainties remain on the horizon

The “year of the pandemic'' turned out to be one of the peaks of the current economic cycle in terms of investments in commercial real estate assets, with a growth of 37% over 2019, to almost 900 million euro. 2021 may see a dip, as some buyers may remain on the sidelines amid a lack of clarity about the future revenue stream, according to the 2021 annual report released by Colliers. For this year, Colliers consultants foresee a total volume for commercial real estate transactions in excess of 0.5 million euro and also see room for a slight decrease in yields by the end of the year for prime office and prime industrial, if the economy, political and monetary system will be satisfactory.

Overall, 2020 saw a mix of old, including newly reactivated, and new buyers. Fosun is a somewhat spectacular new entry as it marks the first major deal involving Asian capital on the local market and this is relevant particularly given how these investors changed the landscape in neighbouring CEE countries in the recent past. We also note quite a lot of interest from new names which continue to look at the Romanian market even in this context, but family offices rather than institutional investors. As another positive highlight for 2020 we want to note that Romania closed the year with a nearly double market share in the CEE-6 region, up from 4.7% in 2019 to 8.5% in 2020. This is quite an achievement that underscores Romania’s potential to punch higher than its current weight in the region”, says Anca Merdescu, Associate Director Investment Services at Colliers.

Also, Colliers consultants continue to see many uncertainties on the horizon for each of the big sectors which may delay deals altogether: for offices, it is about the uncertain revenue stream amid the rise of remote work on a permanent basis; for hotels, it is the decline in tourism as a whole (including business travel) which will squeeze revenues, for retail, it is about the ongoing impact of e-commerce that was accelerated by the pandemic; for I&L, it is about uncertainties related to certain manufacturing sectors that may take years to recover.

We can now safely say that, given the size and the sheer volume of transactions signed, closed, or pending, the interest of institutional investors for the Romanian assets remained unchanged and is expected to further materialise in the years to come. As sophistication and complexity increases among investors and proposed deal structures, one would think that there is an effort of the authorities to bring the Romanian legal framework in line with Western standards for investments – at which point we believe that is important to take a closer look to the specifics of the market”, Francisc Peli, Managing Partner at the PeliPartners law firm, draws the attention.

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Anca Merdescu

Associate Director Investment & Debt Advisory | Romania

Bucharest

As a senior team member I was in charge of a portfolio of over EUR 1bn in assets and coordinated the deal team for several financing transactions including a syndicated loan for refinancing one of the largest shopping mall in Bucharest, development of a medium-size  shopping center in Ploiesti,  several office buildings developments and existing office scheme in Bucharest and Cluj.

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THE NEW ROARING 20S | COLLIERS ROMANIA: REAL ESTATE MARKET OVERVIEW 2021
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