Colliers: Romania’s real estate investment market nearly halves in H1 to EUR 168 mln

The Romanian real estate investment market ended the first half (H1) of 2023 with a total value of EUR 168 million, roughly half compared to last year’s level, according to a recent report by Colliers.

Industrial and logistics accounted for about 36% of volumes and office for around 31%. Retail was next, generating approximately 23% of the turnover, followed by hotels with almost 11%.

“This soft result is not at all surprising to Colliers consultants, who estimated since the beginning of the year that the deal pipeline will slow down compared to the exceptional years 2021 and 2022, given the already difficult deal closing environment,” reads the press release.

The year’s biggest deal was the sale-and-leaseback of the FM Logistic warehouses, a 3PL operator with a roughly 100,000 sqm portfolio in several cities, purchased by CTP for an estimated EUR 60 million (figure not made public by either party).

“The market is currently in a price-discovery mode, with neither buyers nor sellers wanting to be the party that ends up proven wrong by market trends in a few quarters. Hence, the divide between the expectations of buyers and sellers is, for sure, wider than it has been in the recent past. The main sticking points here are, of course, the sharply higher interest rates and, equally important, the uncertainties tied to the path of interest rates going forward,” said Anca Merdescu, Director Investment & Debt Advisory at Colliers.

“On a more positive side, we continue to see good interest for local assets, including from potential new names, though maybe compared to previous years, fewer of these inquiries move into more advanced phases. We would interpret this as confidence in the country’s longer-term potential coupled with caution regarding the current backdrop,” she added.

Several large deals are currently in various stages and could close in the second part of the year, taking the overall volumes for the year towards EUR 500-600 million, about half of last year’s solid EUR 1.2 billion, the same Colliers report said.

Retail volumes should be a bit higher than in previous years as major deals could close in the coming period, predict Colliers consultants, who highlight that with fewer office deals closing, this could be a more balanced year in terms of overall structure.

At the Central and Eastern Europe level (Bulgaria, Czechia, Hungary, Poland, Romania and Slovakia), the total investment volume fell to EUR 2 billion in H1. The total investment volume for the whole year is estimated at EUR 5 billion, “which is still one of the worst results in the last 10 years and also more than half behind the average of the last 5 years of around EUR 12 billion.”

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