The economy of Bucharest stands as one of the most insulated service centers in Europe to the negative fallout related to the COVID-19 outbreak, thanks to its heavy reliance on IT&C activities as well as scientific and professional services, according to an analysis by real estate consultancy firm Colliers International.
However, Romania’s high integration in global value chains means that it will face significant headwinds given negative developments in the global economy.
“Even though it seems like the Bucharest office market may seem fundamentally a bit more insulated to the issues plaguing the global economy, this does not mean that we may not see office market vacancy edging higher or rents come under pressure. Still, the numbers suggest that should a negative scenario come to pass, at least Bucharest may end up suffering much less than other office markets or recover quicker,” said Silviu Pop, Head of Research at Colliers International.
While the full impact of Covid-19 regarding the broader economy and the real estate market is highly uncertain, a certainty is that retail and leisure sectors are among the most impacted over the short-term, as per Colliers' analysis.
Moreover, Romania’s status of a fairly small and quite open economy means that real estate markets will not remain immune to global trends. Given that manufacturing has been quite significantly impaired by the Chinese factory shutdown, in recent weeks, and also taking into account Romania’s heavy reliance on the automotive sector, it means that the impact for the warehouse market should be more significant, but a lot depends on how long this situation will extend, according to Colliers.
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