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The softening of the national currency could pressure rental costs significantly

In a volatile context generated by the Covid-19 epidemic, the local real estate market could be affected this year by the potential depreciation of the Romanian national currency. The depreciation has been minor so far in Romania, of a bit above 1% against the euro in the last couple of months, compared to other countries in the region, like Poland, Czech Republic or Hungary, where national currencies are up to 10% weaker against the euro. Should RON face a similar depreciation, the cost to rent a property would increase substantially, leading to up to 25,000 euro extra costs per year for a prime 1,000 square meter office space in Bucharest, with service charges included, Colliers International consultants estimate.

The Covid-19 pandemic is expected to cause disruptions to various economic sectors throughout the world, including real estate. A particular challenge faced by commercial real estate players in the CEE (Central and Eastern Europe) region is the fact that rents and service charges are paid in Euro and this may create issues down the road. The situation is especially challenging for Czechia (Czech koruna - CZK), Poland (Polish złoty - PLN) and Hungary (Hungarian forint - HUF), where the national currencies have weakened against the euro between 7% and 10%.

The evolution of the national currency is not as bad in Romania, where the RON has softened just 1.3% between mid-February to end-March against the euro. This might not mean much for rents now, but the situation needs to be put into wider context, as the Romanian currency had been weakening constantly over the last 5 years whereas regional peers were less dynamic. Compared to 5 years ago, the RON is nearly 9% weaker compared to 11% for the PLN and 17% for the HUF, with the most important softening move for the Polish and Hungarian currencies taking place just this year”, says Silviu Pop, Head of Research at Colliers International, who has analysed various scenarios regarding the evolution of the national currency and the possible impact on the real estate market.

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Silviu Pop



Before joining Colliers mid-2017 as Head of Research for Romania, Silviu Pop worked with ING Bank for close to three years as an economist, covering macroeconomic/financial market themes for Romania, Bulgaria, Serbia and Croatia. As of October 2022, he holds the position of Director for Research for the CEE and Romania. His previous professional experience includes working almost 7 years as a financial journalist at various media outlets in Romania, including the sole business-oriented TV station in Romania, where he hosted a daily show for a period of time; during this interval,  he won a number of scholarships, including a stint with Reuters. He holds a BSc in economics at the Bucharest University of Economic Studies.

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