Colliers: Romania’s property investment market matured over three decades

Romania’s real estate investment market has changed significantly over the three decades since Colliers entered the country, moving from yields above 20% to annual transaction volumes exceeding EUR 1 billion in its strongest years. The consultancy presented the evolution in an analysis marking its 30th anniversary in the local market.

In real estate, yields reflect the risk investors associate with a market. As perceived risk declines and competition for assets increases, yields generally fall and property prices rise.

“From this perspective, Romania’s move from yields above 20% in the early years of the market to single-digit levels today shows how much investor perceptions have changed over the past 30 years,” Colliers said.

Romania’s market was still at an early stage in the 1990s, when few modern offices, shopping centers, or logistics properties were available as investment assets. Smaller office buildings were changing hands at yields of 18%-22%, reflecting investors’ perception of the risks associated with the country.

The 2003 sales of Opera Center and Europe House to Austrian funds CA Immo and Europolis, at yields of around 12.5%, helped place Romania on the radar of institutional investors, the analysis found. Transaction volumes subsequently reached approximately EUR 850 million in 2006.

“If we compare the market of 30 years ago with the one we see today, the difference is enormous,” said Robert Miklo, partner and head of capital markets at Colliers. “Back then, there were few properties suitable for large-scale investment. Today, we see transactions worth hundreds of millions of euros and domestic investors capable of acquiring sizable portfolios.”

Romania’s accession to the European Union accelerated the market’s development. Investment volumes reached a record EUR 1.5 billion in 2007, when America House was sold to Natixis for EUR 120 million at a yield of 5.5%, the lowest recorded in the country.

Then, the global financial crisis caused investment volumes to fall to around EUR 100 million in 2009. Activity recovered from 2014, with annual transactions generally ranging between approximately EUR 650 million and EUR 900 million in subsequent years.

Another major change over the three decades has been the emergence of domestic and regional capital. Romania recorded transactions of around EUR 1.25 billion in 2022, including Paval Holding’s EUR 377 million acquisition of CA Immo’s portfolio, the largest real estate deal completed in the country.

“We are no longer as dependent on decisions taken by investors in Europe’s major financial centers,” Robert Miklo said. “Romanian investors can now support large transactions and, in many cases, take a long-term view of these assets.”