Moreover, the average sale price for office buildings rose by 4.6% to EUR2,266 per square meters, while the average price for retail properties neared EUR1,310/sqm compared with EUR973 /sqm in 2021, considering that a large number of distressed properties were sold.
On the other hand, industrial buildings saw a decrease in the price per sqm, down to EUR405 versus EUR503/sqm in 2021, which is due mostly by a lack of transactions with prime properties.
The largest transactions in Romania by volume targeted CA Immo’s sale of its Romanian office portfolio (six buildings totaling 165,000 sqm) to Paval Holding Properties (Dedeman Group) and Prime Kapital’s disposal of its 60% interest in six retail parks (132,000 sqm GLA) to MAS Real Estate. The S Immo’s acquisition of the Expo Business Park office project from Portland Trust was the third transaction that crossed the EUR100 million threshold. These three deals account for more than half of the total volume recorded in Romania in 2022.
In Romania, even though the number of transactions completed in 2022 was slightly lower compared to 2021 (51 vs. 54), the total investment volume reached a record high, of almost EUR1.3 billion, out of which two thirds (EUR944 million) were signed in the second half of 2022. A total 12 properties were the subject of two major office and retail portfolio disposals. In terms of assets, the highest number of transactions targeted office buildings – around 43% of the total (22), followed by retail properties (12). Moreover, seven industrial and logistics assets have switched owners in the analysed period.
“In an environment marred by uncertainty, the CEE real estate market continued to be an attractive investment alternative, especially in regards to the main real estate segments – office, retail and industrial. While foreign investors from mature markets, such as the United States, Germany or Sweden, remained dominant in the Polish market, closing the largest transactions, we have noticed an increasing activity of the domestic capital in the other markets. This comes as a result of a better understanding of the market particularities, with the local investors having a higher appetite for risk. As such, almost 40% of the investment volume recorded in the region in 2022 represents acquisitions made by local investors, the most active being Pava Holding from Romania (with investments of over EUR450 million in the country) and Adventum from Hungary (with acquisitions exceeding EUR350 million in Hungary, the Czech Republic and Poland),” said Cristi Moga, Head of Capital Markets Cushman & Wakefield Echinox.
Prime yields advanced in the second half of 2022 across all segments due to increasing financing costs, in line with the trend registered in the entire CEE region. Thus, the office and retail segments recorded a 25 bp spike, with a 15 bp rise for industrial & logistics assets respectively. Even though the increasing interest rates will continue to put pressure on the exit yields, Romania remains an attractive market, as the gap between the local benchmarks and the other CEE markets, such as the Czech Republic, Poland or Hungary is still relatively high in all market segments (generally in the 100 – 250 basis points’ range).
The total volume invested in income-producing real estate assets – office, retail, logistics and industrial spaces and hotels – in the Central and Eastern Europe returned to growth last year, a positive evolution mainly driven by the activity recorded in Romania and Slovakia. Romania benefitted from an almost 40% increase of the investment volume, thus moving to the third place in the region (after Poland and the Czech Republic) in this regard in 2022.
The total transactional volume at regional level reached almost EUR10.7 billion in 2022, a 6.6% growth compared with 2021, while the market had previously seen a 4.3% contraction in 2021 vs 2020. Almost all countries in the region reported an upward movement in 2022, with the sole exception of the Czech Republic, which experienced a second consecutive year of decline.
Therefore, Poland recorded growth of 2.2%, while the investment volume in Slovakia was 45.9% higher year-over-year in 2022, with Hungary seeing only a marginal increase of 0.4%.