Home » BR Exclusive » Real estate investment market ‘to rally by yearend’ Real estate investment market ‘to rally by yearend’
The total local real estate investment volume is expected to amount to between EUR 600 million and EUR 800 million by the end of this year, say pundits. While this will be down by as much as half against the previous year’s record level, investment activity is more diverse with new investors testing local waters and a wider range of properties catching their eye, according to market representatives.
Simona Bazavan
Real estate investment fund New Europe Property Investments (NEPI) announced at the end of August that it had bought the Auchan Titan commercial center in Bucharest from Aberdeen Asset Management AG for EUR 86 million. Indeed, August turned out to be a busy month with German investment fund GLL Real Estate Partners also announcing it was in the process of acquiring the Floreasca Park office project in Bucharest from its developer Portland Trust for over EUR 70 million and Belgian developer CTP buying the Prologis Park Bucharest A1 logistics project near the capital. After rather sluggish activity in the first semester, all this was welcome news for the local real estate investment market.
Overall, the value of new real estate acquisitions closed in the first semester of this year amounted to less than EUR 100 million, but real estate pundits are confident this will pick up sharply over the next few months. “We estimate a total investment volume of about EUR 600 million to EUR 800 million should all the deals presently being negotiated be finalized,” Laura Dumea-Bencze, head of research Romania & CEE research analyst with CBRE Romania, told BR.
This means the remainder of 2015 will be even busier for the local real estate market with several new transactions like the one closed by NEPI being inked.
Less but more
Even with the total investment volume reaching EUR 800 million in 2015, this would still be well below last year’s record level. The investment volume in real estate assets reached a whopping EUR 1.2 billion in 2014, up from EUR 300 million the previous year and the highest level since 2007. But industry representatives say that this comparison alone is not relevant to the overall state of the market.
“The transaction volume registered in 2014, of approximately EUR 1.15 billion, was the second largest ever recorded in Romania and the biggest since the financial crisis, so it is a challenging benchmark. This volume was heavily influenced by a few large transactions such as the initial acquisitions of Globalworth and the takeover of 12 retail properties by Immochan, which are difficult to match,” Andrei Vacaru, capital markets consultant and the head of research at JLL, told BR.
A correction was to be expected in the first part of 2015 given the record investment volume reported towards the end of 2014, added Bencze. “There are however encouraging signs for the end of 2015,” she went on.
And while the total investment volume will nevertheless be lower in 2015, investment activity is more diverse this year with a wider range of deals in terms of type and size, said Vacaru. “This might not be visible in the transaction volume registered in the first half of the year, as many deals have slipped into the second semester,” he added.
Another difference this year is that there have been several transactions of around EUR 100 million each, which was less common in the past, Laurentiu Lazar, director of investment and valuation services at Colliers International, told BR. “This offer has generated fiercer competition in terms of attracting capital. This is a reason the market moved a bit more slowly than expected at the beginning of the year,” he noted.