“The need to diversify income-generating sources has defined a new residential investment strategy with the acquisition of multiple units at once, namely bulk acquisitions in one ore more residential projects. Local investors are interested in such acquisitions and in terms of a buyer’s profile it’s usually entrepreneurs with capital raised in other industries and redirected into real estate,” said Flavius Pop, senior consultant Living Department at JLL Romania.
These trends have attracted institutional investors to the local market, as investment funds seek large volumes, of hundreds or thousands of housing units, that generate minimum yields of 6.5%-7%. The Romanian market is highly attractive as the European market has very few examples of yields higher than 3%. While Poland registers average yields of 5.5%, there are properties in Bucharest that generate yields of 7%-8%, JLL noted.
Restrictions to contain the Covid pandemic have heightened living space issues and buyers paid more attention to efficient living plans rather than location. In the new labor market context, some office developments are being converted into residential spaces. Another trend on the market is that of projects built to rent.