Romania mania

 Romania has the ninth largest population in Europe, with 21.7 million people. Over the past five years, the country’s macroeconomic performance has been encouraging with the economy registering a consistent level of growth. According to consultants Eurisko, GDP growth has been strong – averaging 5 pct since 2001, making it one of the highest in Central and Eastern Europe. At the same time, the level of inflation fell to 7.5 pct. (previously Romania had suffered from hyperinflation). Consequently, Romania has benefited from an improvement in the business environment. According to the Romanian Agency for Foreign Investments and the National Bank of Romania, foreign direct investments in first 11 months of 2005 reached EUR 4.436 bln compared to 2.158 bln for the same period of 2004. The interest of foreign investors was concentrated on the automotive, IT and electronics industry, as well as the real estate market.

Compared to other markets in Central and Eastern Europe, Bucharest is still relatively undersupplied in terms of quality office space. By the end of 2005 the total modern office stock stood at approximately 570,000 sqm, of which the majority was class–B type space. According to CB Richard Ellis, 2005 finished with a vacancy level of 3.7 pct, with class–A and class–B vacancies at 0.7 pct and 5.7 pct respectively. A DTZ report published in spring 2006, states that the level of vacant space in the Romanian capital is below 3 pct.

The developers now operating in Romania are mainly Western and Central European. Companies such as GTC, Strabag, Immoconsult, Raiffeissen Evolution, Bouygues and Portland Trust are close to delivering their second international–standard office projects.

According to CB Richard Ellis, app. 172,000 sqm of office space is scheduled to be delivered by the end of 2006, of which 51 pct is class-A space. Of the total planned office supply for this year, app. 60 pct has been already pre–leased. For class–A buildings this level is even as much as 70 pct!

The retail market

The only retail project to be delivered in Colliers International in their report states: “2006 is the beginning of a tumultuous period. (...) The new supply of modern retail space will separate truly professional projects from amateurish developments. Factors such as location, concept, quality of the product, tenant mix, and last but not least, the developer’s professionalism, will all contribute to the success or failure of the project.”

A number of German, French, American and Italian retailers have been present on the market since 1990 (including Adidas, Nike, United Colours of Benetton, Max Mara, Kenvelo, Stefanel, and Yves Rocher among many others). In the hypermarket sector, operators such as Carrefour, Kaufland, Auchan and Real are present. Ikea has also announced

 The warehouse market

According to DTZ, in terms of location, the new schemes have been developed in peripheral locations, next to the main routes to Ploiesti (North), Pitesti (West), Constanta (East) and around the Bucharest ring road.

Demand for higher–quality warehouse space is mostly driven by large multinational companies entering the Romanian market, as well as by those who want to move out of unsuitable older buildings.

Projects in and around Bucharest dominate the warehouse market in Romania, but modern space is also available in other strategic locations, such as Brasov (Brasov Logistic Park), Timisoara (Incontro Platform and Dunca Logistic Center), Arad (Incontro Platform), Iasi (North Point Business Park) and Bacau (Hit Industrial Park). Cluj and Constanta are also expected to be a new key locations.

High class residential properties to let are mainly located in the northern part of Bucharest. However, the supply of villas for rent does not meet the demand for this type of residence, whether they are new, old or renovated. A large number of apartments have been recently completed to very high standards, with exquisite finishing and this approach would appear to characterize the supply of high class residential space in recent years. Compounds have been developed in various areas, including Baneasa, Herastrau, Primaverii, Dorobanti, Floreasca and Aviatorilor. In the centre, the Domenii Area is appreciated for its architecture and due to its proximity to the centre is extremely sought after by foreign citizens.

 The investment market

On the investment market, the leading positions are held by Austrians, such as Immofinanz and CA Immo, as well as Europolis. Other investors include Morley Fund Management, R I Investment and Fabian Capital.

Ben Shilling