The volume of real estate investment reached €1.25 billion in 2022, a record level after the 2008 economic crisis, while at European level we see significant declines
During 2022, the transaction volume of commercial real estate assets with a value of €5 million or more totalled around €1.25 billion, 40% more than in 2021, out of which almost €600 million represents the volume transacted in Q4 alone. A strong influencing factor were the acquisitions of Pavăl Holding Group, which accounted for almost 37% of the annual total.
In the absence of portfolio transactions and under the influence of global and regional trends which, albeit with a delay, are also manifesting themselves in Romania, for 2023 we expect a volume that will not exceed the average of the last few years of around EUR 8-900 million.
In terms of yields, both regionally and locally there is an upward trend in the context of higher financing costs and risk aversion.
During the fourth quarter, prime yields in Romania increased for the office market from 6.75% to 7.00%, while in the shopping centre and industrial space segment they remained at 7.25% and 7.50% respectively.
“It is important to note that the change in the region is more pronounced. In Poland, for example, the largest market in Central and Eastern Europe, we can see a significant increase in yields this year, by 75 bps for the office and industrial sector and 50 bps for the retail sector, to 5.25 and 5.75% respectively. These increases in yields will be partly offset by rising rents, particularly in view of inflation indexation, which has reached a record high”, declared Andrei Văcaru, Head of Capital Markets at JLL Romania.
In 2022, the office sector continued to lead in terms of transaction volume share, with almost 63% (€784 million), followed by retail with around 24% (€305 million) and industrial with around 8.5% (€106 million).
Bucharest concentrated in 2022 no less than 75% of all transactions registered in Romania, with a cumulative value of approx. 940 million euro.
From the point of view of the source of investors' capital, for the first time in the history of the modern institutional market, Romanian investors had the largest share in 2022, with 52% of the total, followed by investors from South Africa (20%), Austria (10%) and Belgium (8.5%).
“Going forward, given current market conditions, investors with equity and no need for bank financing will have a significant competitive advantage, and properties with bank financing transferable to a potential buyer will be significantly more liquid”, declared Andrei Văcaru, Head of Capital Markets at JLL Romania.