This volume includes only transactions involving land for commercial real estate projects in the residential, office, retail sectors, without the industrial and energy sectors.
Retail boasta the strongest focus, as developers continue to see opportunities in many locations throughout the country. Since the summer period has been fairly quiet so far, Colliers consultants expect modest volumes in the subsequent quarters.
In terms of demand, it was almost evenly split between retail and residential. However, while retail developers remained quite active, focusing mostly on land plots for retail parks/big boxes in areas/towns with limited coverage of modern retail schemes, in the residential sector there is a lull in sales as higher interest rates and increased construction costs have led to pretty significant decline in activity, particularly in comparison to the 2020-2022 period.
“For retail, a special note should be made about Bucharest, which is still very much in an uncertain situation with regards to urbanism and legislation. We have quite a lot of transactions that could close provided that certain conditionalities are met regarding construction/zoning permits. On the residential side, many developers still have a significant land bank for potential projects that they could start now, though many want to wait a bit longer to see where the market is going over the short term”, said Sinziana Oprea, Director Land Agency at Colliers Romania.
Supply remains decent, throughout most of the country, with both large industrial platforms/land plots and medium-sized plots that can accommodate different types of real estate projects. Meanwhile, some investors are looking into acquiring strategic locations that would likely see long term demand irrespective of what happens with the economy in the short term and which also acts as a good hedge against inflation. Prices also remained more or less unchanged compared to the end of 2022, with owners under no particular pressure to offer discounts and decreasing interest for new deals impacting any potential moves to the upside. Very good land plots, in particular those with urbanistic documentation in place, continue to have high prices.
According to Sinziana Oprea, fewer deals have been started in 2023 and are unlikely to close so fast, as it takes at least one or two quarters to close a deal even when things are already planned. In other words, the land market is now experiencing a return to more normal levels after an unusually active period amid the pandemic, considering that 2021 was the best year in the last 15 for the Romanian land market, with transactions exceeding EUR800 million.