The overall real estate market has bottomed–out as compared to the previous year and is set to enter a new growth cycle assuming sustained GDP growth and increasing FDI inflows coupled with planned absorption of EU structural funds – these are only several of the conclusions of a Crosspoint Investment Banking & Real Estate Analysis on the Bucharest real estate market in Q1, 2015.
Click here to download the full report: Crosspoint Real Estate Market Watch_May 2015
OVERVIEW:
Investments
- During 2014 the total value of transactions of institutional grade real estate traded in Romania exceeded € 700 mil. for the first time since 2008.
- The prime investment yield is currently at 7,5 – 8% for prime office investments and the average market yield for all office investments remains 8,5%. Yields are likely to remain constant during 2015 due limited re-financing structures in the short term.
Office
- Increased appetite from the investors, who are now more actively prospecting the market to invest in fully occupied buildings, well positioned and with a good tenants mix.
- The supply and demand of both A & B Class office accommodation shall remain in relative equilibrium during 2015.
- Vacancy rate decreases to circa 13% – its lowest level since 2008.
- Approximately 180.000 sq.m. of new stock delivered in 2015.
- More than 80% of the future tenants are requesting above standard facilities: a flexible and efficient layout of the spaces, buildings with distinct architecture, with personality or built – to – suit options.
Retail
- Prime rents in Bucharest’s shopping centers are now € 60/sq.m./mo.
- Rents are likely to begin to appreciate.
- Average high street rent: € 25/sqm/mo.
- Increase of appetite for investments in the retail sector, as investors are prospecting to acquisition commercial spaces that are already leased, in well – established areas or commercial arteries as well as in unconventional areas that are able to generate 7-10% yields.
Residential
- Market recovery indicator: the sale of apartments in residential projects under construction.
- The quantity of delivered units will tend to increase in the following months.
- The return in the market of the “traditional” developers – who put their projects on hold during the crisis period and are now coming back on the market, with their projects adapted to the current context.
- Developers migration from South to Northern areas of Bucharest.
- Increasing demand for apartments in the Northern area (Barbu Vacarescu, Aviatiei, Floreasca, etc.).
Land
- Accelerated demand in Q1 2015.
- Most of the investors/ developers are scouting for 800-2.000 sq.m. size land plots.
- Return of residential developers on the land segment.
