Colliers: Favourable H1 for Romania’s real estate market

Romania’s real estate market has been showing signs of moderation across various sectors, in line with the economic deceleration, but the overall performance remains robust, experts from Colliers Romania say in their H1 2023 outlook.

The logistics and industrial market saw the most promising results, with leasing activity increasing by about a quarter YoY, while the office market in Bucharest also reported an increase in rental volume of over 20%. On the other hand, however, in the context of rising interest rates, less favourable results were recorded in investment transactions, where volumes halved, and in the residential area, where sales have fallen rapidly.

“The current context is not the easiest, as the economy is sending mixed signals, we are seeing some good news and some worrying signals, especially regarding the global economy. The real estate market is following these developments, but each sector is experiencing the present differently,” said Laurențiu Lazăr, Managing Partner & Head of Investment at Colliers Romania.

According to public data quoted by Colliers, around 500,000 square meters of modern logistics spaces were leased in the first half of the year, almost double compared to the same period last year. The figure takes into account only publicly available information.

What’s different from other years is that Bucharest accounts for only a third of all rental transactions, a trend that Colliers experts have been expecting for some time, as infrastructure developments, labour availability and regional development push more and more firms to look for logistics space in areas other than near the capital. In the past, Bucharest accounted for more than half of all rental transactions.

As for the office market, the first quarter of the year was very weak, but it was followed by a second quarter that was among the strongest in recent years and might have been considered among the best even before the pandemic, Colliers experts say.

Around 160,000 square meters of modern office space was leased in Bucharest in the first six months of the year, compared to around 130,000 square meters in the same period in 2022. However, new demand only amounted to around 45,000 square meters, down by 40% YoY.

In the retail sector, although appetite remains strong from developers, the sales have increased, and activity is somewhat above pre-pandemic levels, companies are feeling pressure on margins amid rising rents (including administrative costs), the same report said.

Meanwhile, the land market had a pretty solid first half of the year, with a total volume for commercial real estate projects of around EUR 250 million, almost half of the figure recorded for the whole of 2022. Colliers includes in this number only land for office, commercial and residential projects, without industrial space.