Last year was a record breaking year at a country level with the highest ever volumes recorded in the Czech Republic and Slovakia and second best ever results recorded in Poland, Hungary and the SEE region.
According to JLL, the forecast for 2017 remains positive, provided that the supply of product can match the strong levels of demand.
Poland recorded an overall transactional volume share of 36% last year, followed by the Czech Republic (29%), Hungary (13%), SEE markets (8%), Romania (7%) and Slovakia (7%).
For Romania, the 2016 property investment volume is estimated at EUR890 million, nearly 35% higher than the EUR663 million registered in 2015. However, the number of transactions was slightly smaller, meaning that the average deal size increased.
Bucharest accounted for over 70% of the total investment volume, less than in 2015, showing that liquidity in secondary cities has somewhat improved. Market volumes were dominated by office transactions (45%), while retail and industrial accounted for close to 26% each.
The largest transaction registered in 2016 was the acquisition of 26.88% of Globalworth’s shares by South African group Growthpoint for approximately EUR186 million.
The most notable retail transaction was the acquisition of Sibiu Shopping City by NEPI from ARGO for EUR100 million, which represents the largest single asset deal outside of Bucharest since the economic crisis.
Several new names entered the Romanian real estate market in 2016, through the purchase of regional platforms or individual assets, such as Logicor (Blackstone’s European industrial division), GIC, PPF and Growthpoint.
”Market fundamentals remain robust. The macro-economic forecast for Romania is positive. The country was the EU’s top performer in 2016 (with GDP growth estimated at 4.8%) and is expected to hold this position in 2017 as well, despite a minor slowdown. Occupier demand is at record high levels in all market segments. Availability of quality product is increasing and there is significant yield spread between Romania and Poland or the Czech Republic. On the financing side, terms and conditions have improved significantly over the past year getting closer to what can be expected in the core CEE markets. Consequently, sentiment is strong, with transactions of approximately EUR630 million in different stages of negotiation,” said Silviana Petre Badea, National Director, Head of Capital Markets JLL Romania.
Prime office yields are at 7.5%, prime retail yields at 7.25%, while prime industrial yields are at 9.00%.
”Yields for office and industrial are at the same level as 12 months ago, while retail yields have compressed by 25 bps over the year. However, there is downward pressure on yields and in 2017 significant compression in industrial and mild compression in offices and retail is likely”, adds Silviana Petre Badea.
JLL is a financial and professional services firm specializing in real estate services and investment management, with global annual revenues of $5.4 billion.