Romania’s commercial real estate investment volume ended 2020 with a volume of €588.5 million, half versus 2019 but similar with 2015.
Although 68% of the total investment volume was transacted during the first six months, the second half of the year witnessed the largest transaction of 2020, marking the entrance on the Romanian market of a new Chinese investor.
Fosun acquired Floreasca Park office building in Bucharest for €101.5 million thus reconfirming the attractiveness of the Bucharest office investment market.
Also in 2020, the biggest investment deal negotiated in 2019 was finalised when AFI Europe completed the transaction process with NEPI Rockcastle for three office buildings in Bucharest (Floreasca Business Park, The Lakeview, and Aviatorilor 8) and one in Timisoara (City Business Park) for an estimated total volume of €308 million.
2020 ended auspiciously for the office investment market as S IMMO, advised by CBRE, agreed the transactional terms for a forward purchase of the Campus 6.2 and 6.3 office buildings, for approximately €97 million.
Alina Marulis, an entrepreneur from Bucharest, is investing 10 million euros in a boutique project of 12 villas, at the edge of Baneasa forest, near the American school.
The Oxygen Home project will have three phases: construction for the first three villas has begun and reached ground 0, while the entire project will be delivered by the summer of 2022.
Currently the construction is financed from developer’s own funds, with a pre-approved investment loan from Libra Bank, which can be accessed for later stages.
The houses are built on plots of 450 sqm and have an area of 375 sqm, distributed on the ground floor and first floor. The price of a villa starts from 975,000 EUR + VAT.
Oxygen Home will be certified as a sustainable ensemble and will receive the “Green Homes” certification from Romania Green Building Council.
The villas will be turnkey delivered and will benefit from facilities such as smart home system controlled via smart phone or tablet, jacuzzi, sauna, fireplace, garden with deck and lawn, arranged according to a landscaping project with integrated lighting system.
Romanian market was the only one which recorded a growth of the investment volume in the real estate market in the entire CEE/SEE, in 2020 compared to 2019.
As such, real estate properties with a cumulative value of €9.9 billion were transacted in the region in 2020, an almost 29% decrease from the 2019 volume.
Poland, which has the highest share in the total volume (57%), recorded a 27% decrease, Hungary even more at -35%, while Czech Republic had the most dramatic drop at 60%.
In 2020, the total volume invested in real estate assets in Romania reached €914 million, a 28% increase compared 2019, according to Cushman & Wakefield Echinox.
The most active segment was by far the Office sector, with estimated transaction values of approximately €784 million, representing 86% of the total investment value.
The Industrial segment attracted 9% of the capital, while the remaining 5% were split between the Retail and Hospitality sectors.
In total, a number of 24 income-producing properties were transacted in 2020, an average of €38 million per property, one of the highest such values in the last decade on the local real estate market.
Biggest transactions of 2020
The six largest transactions pertained to office projects, including the disposal of NEPI Rockcastle’s office portfolio to AFI Europe. The transaction consisted of four office buildings in Bucharest and Timisoara totaling 118,000 sq. m GLA, which were sold for €307 million, the largest office deal ever signed in Romania.
Moreover, the €100 million threshold was exceeded by a number of other office transactions, the most relevant for the market being the purchase of Floreasca Park, a landmark 38,000 sq. m GLA office project, by a joint venture between Zeus Capital Management and Resolution Property (Fosun), marking the entry of Chinese investors on the Romanian office market.
Over the period 2010 until the third quarter of 2020, rents increased by 14.6% and house prices by 26.8% in the European Union.
When comparing the third quarter of 2020 with 2010, house prices increased more than rents in 16 EU Member States, Eurostat data shows.
House prices increased in 23 Member States and decreased in four, with the highest rises in Estonia (+105.1%), Hungary (+92.2%), Luxembourg (+90.5%), Latvia (+83.6%) and Austria (+81.3%).
Decreases were observed in Greece (-31.0%), Italy (-15.5%), Cyprus (-7.7%) and Spain (-4.5%).
Different pattern for rents
When comparing the third quarter of 2020 with 2010, rent prices increased in 25 EU Member States and decreased in two, with the highest rises in Estonia (+136.6%), Lithuania (+106.9%) and Ireland (+62.2%).
Decreases were recorded in Greece (-25.2%) and Cyprus (-4.5%).
Real estate investors in Europe are increasingly targeting large cities and assets minimally disrupted by the health crisis which ensure stable incomes, such as logistics and residential, according to the Emerging Trends in Real Estate 2021 report produced by PwC and the Urban Land Institute.
Other segments that can benefit from relatively stable demand are data centers, buildings with life sciences facilities (pharmaceutical, biotechnology and medical device companies), new energy / infrastructure, industry and communications towers.
Top real estate assets in 2021
Given the strong growth in remote working and ongoing uncertainty around how that trend may play out over the longer term and the future role of the workplace, no office sectors feature in the top ten this year.
For 2021, the ”flight to safety” for many investors involves technology, so three of the top four property types are likely to benefit from the increased pace of digitalisation around the globe, as boosted by responses to COVID-19, including data centers, communication towers and logistics facilities.
The residential market remains highly favoured by investors, with three sectors in the top ten representing some form of residential real estate.
Top cities targeted by investors
The city rankings in this year’s report reflect both the caution and opportunities driving the market, with a focus on cities believed to offer liquidity and stability.
Berlin tops the list as the overall favourite for prospects in 2021, with investors encouraged by the relatively strong performance in tackling COVID-19 by Germany as a whole. In fact, three German cities appear in the top 10.
London has climbed two places to second as investors see it as providing good long-term value. Paris remains in the top three.
Overall ranking
City
1
Berlin
2
London
3
Paris
4
Frankfurt
5
Amsterdam
6
Hamburg
7
Munich
8
Madrid
9
Milan
10
Vienna
The industry sees the merits of small- and medium-sized cities, provided they are well connected, with transport connectivity overwhelmingly considered the most important factor in assessing cities.
Other forecasts for the European real estate market in 2021
Security of income in non-core assets is causing concern, but 55% of investors expect to be net buyers of real estate in 2021.
The survey shows a marked decline in business confidence for 2021, with almost half the respondents expecting a fall in profits and a quarter anticipating job losses.
Domestic investors are expected to come to the fore across Europe in 2021. About a third expect European investors to increase their commitments in 2021.
Real estate executives were cautious about the overall outlook, resulting in a marked decline in business confidence, with 28% foreseeing a decrease in business confidence, compared with 13% in 2019. In addition, 44% anticipated a fall in profitability, compared with 15% in 2019.
Data presented by Buy Shares indicates that the UK mortgage approvals have grown by 50.97%. The growth is on a year-over-year basis between October 2019 and October 2020.
As of October, the number of approvals stood at 97,530 while a year ago, the figure was 64,600. During the last 12 months, the lowest approvals were recorded in May this year at 9,270.
A historical view of the approvals shows that October approvals are the highest in about 13 years.
In September 2007, the mortgage approvals stood at 108,000. The approvals later slumped significantly to 27,000 in January 2009 in the wake of the economic crisis.
The Buy Shares report attributed the recent surge in approvals to government measures like suspending the stamp duty as well as a change in consumer behavior.
Cordia International, the 92,92% shareholder of Polnord, has announced a public tender offer to acquire the remaining approximately 7,08% of shares in Polnord SA.
The goal is to increase Cordia’s stake in Polnord SA to 100% of outstanding shares.
The tender offer price has been set at 3,55 PLN a share, offering significant upside to the most recent market price.
At the same time, Cordia has applied for an extraordinary general meeting of shareholders in Polnord SA, in order to make a decision on withdrawing the company’s shares from public trading.
The subscription period of shares will start on the 21st of December 2020 and last until 20th of January 2021. The day of the transaction is planned for 25th of January 2021 with settlement on the 28th January 2021.
Cordia has initially acquired a controlling stake in Polnord by subscribing for 63.7 million series ”T” shares in a public share offer in December 2019.
Later, in February 2020, Cordia announced a public tender offer for the remaining shares and increased its stake further to 92,92%.
As a consequence of Cordia’s engagement, Polnord’s financial situation has stabilised and has managed to meet all its debt obligations seamlessly.
The magnificent Palazzo Serristori in Florence, one of the most important Renaissance buildings in the city, with its 5,500 square metres of interiors and approximately 3,000 square metres of garden, will be completely restored after long years of non-use.
Acquired by the LDC Group of Taiwan, already involved in the redevelopment of Palazzo Portinari Salviati in the city, it will be restored to create prestigious extra luxury apartments, with prices ranging from 2 to7 million euros.
Each of the apartments, embellished with period frescoes, will have common areas such as the garden with swimming pool and the SPA.
The construction of the palace dates back to the beginning of the 16th century when Lorenzo Serristori wanted to build a magnificent residence on the banks of the Arno River surrounding a hunting lodge.
Among the eminent figures that have stayed at Palazzo Serristori are Giuseppe Bonaparte, Napoleon’s brother and King of Spain and Naples and Pope Leo X of the Medici, whose sixteenth century coat of arms is preserved in sandstone in the main atrium.
Others include internationally renowned nineteenth century intellectuals and artists, such as Giacomo Puccini, Gioacchino Rossini, Lord Byron, Percy Bysshe Shelley, the composers Richard Strauss and Richard Wagner, and the Queen of Italy, Elena of Savoy.
Original features of the palace have survived the centuries
This include the magnificent frescoed ballroom, measuring 250 square metres in area and 12.5 metres in height, the largest and most prestigious in Florence, to a foyer covering approximately 150 square metres, which will be used as a common area for all the apartments and whose construction dates back to the 1600s.
There are two splendid Murano chandeliers, dating from the 1700s, still on display in the ballroom, both intact and in working order.
The original wooden floors and authentic works of art also remain, as does the ”Hall of Mirrors” and the palace’s fireplaces, made of precious marble and feature the Serristori coat of arms.
Not forgotten, the glazed terracotta stove, manufactured by Ginori, of which there is only one other example in the world.
More than half (55%) of Bucharest residents currently living on rent do not plan to buy an apartment next year and want to continue renting, according to a Colliers International study.
However, 45% of them consider changing their rented housing, the majority (66%) because they want a more spacious or better positioned apartment, including new buildings, and only a third because they want to lower their rental costs.
The crisis caused by the coronavirus is beginning to show its effects on the housing rental market as well.
In Bucharest, students have left many empty properties, apartments previously rented per night have been converted into apartments with monthly rent and the number of rental offers in the market began to grow.
The value of rents remains the main factor for tenants when choosing a rental or another.
In the current uncertain context created by the Covid-19 pandemic, tenants are looking for security, either by reducing the rent or moving to a smaller space, either by reaching a longer-term agreement with the owners or registering contracts at the National Agency for Fiscal Administration (ANAF).
Compared to the previous crisis from 2008-2009, lease registration ensures owners binding, enforceable documentation, facilitating money recovery from tenants.
Beyond the cost of the monthly rent, most respondents who consider it more profitable to rent than to buy their home are also looking for certain functionalities that suit their needs and lifestyle, such as parks, green spaces and playgrounds located in proximity, which have become almost as important as the access to public transport.
If the proximity to a supermarket has always been a priority, top preferences this year also include pharmacies, which are requested by almost 50% of tenants, according to data from the study requested by Colliers International.
Citycon acquired the plots at Kotkapoja 1, 3, 5 adjacent to the Kristiine centre’s parking lot and is planning real estate development on the acquired land.
The plots have an area of 5690 square meters and have the intended purpose of residential area.
Approximately 130 stores on more than 40 000 square meters of business space are operating in Kristiine.
Kristiine has 110 different fashion stores and 16 places to eat and is daily visited by about 16,000 people.
The future development plan of the company also envisages the development of Rocca al Mare, another centre located in Tallinn, into a multifunctional living environment of the region.
Rocca al Mare centre in western Tallinn is planning to expand on account of the current parking lot, by building additional shopping as well as office space with the plans to also construct residential premises and a hotel.
Cordia Romania has started construction works on the second phase of Parcului20 residential project in Expoziției area, North Bucharest.
The company commissioned the project`s first phase and started the sales for Parcului20 phase two in September 2020.
Construction company Concelex, which built Parcului20 phase one, was appointed as general contractor for the project`s second phase, following a tender in which four other construction companies participated.
Parcului20 is among the first smart residential projects in Romania, all its apartments being equipped with integrated state-of-the-art smart home systems.
The total investment for Parcului20 residential project amounts to EUR 40 million euro.
In addition, Cordia Romania has an investment plan for developing residential projects on five already acquired land-plots in Central-North Bucharest, generating a 2,000 apartments pipeline on medium term.
Moreover, Cordia Romania has an investment budget worth EUR 40 mil. for acquiring land-plots in Bucharest.
