The Romanian real estate market recorded good results in the first half of 2019, with activity on office and investment segments getting more dynamic than that of some CEE peers.
With the full year GDP expansion figure looking likely to top 4%, 2019 looks set to become the 9th consecutive year of continuous growth for Romania, equaling the previous record streak, seen between 2000 and 2008. There are signs that the economy has already peaked for this cycle and that it is getting ready to shift into a lower cruising speed.
The first half of 2019 saw deliveries of some 185,000 sqm in Bucharest, taking the city’s modern office stock to 2.6 million sqm. This is an increase of over 10% compared to last year’s end-June stock, making Bucharest the most dynamic among CEE capitals. Total demand for modern office buildings stood at 188,000 sqm in Bucharest in the January-June period, the best first semester in the post-crisis period.
Around 300,000 sqm of new modern storage spaces came online in the first half of 2019. Bucharest accounted for over 40% of the total deliveries. Outside the Capital, investments continue to be mostly geared towards cities in the region of Transylvania, which accounted for over one third of new I&L spaces. Market take-up more than doubled in the first semester, to a bit over 240,000 sqm, versus around 110,000 sqm in H1 2018.
While inflows into Poland are still lagging (-20%) versus a strong H1 2018, Romanian, purchase numbers all picked up in Q2 after a weak Q1. The first semester closed with a total real estate investment volume of around EUR 345mn in Romania. Office continues to dominate the CEE region in H1 2019, up 43% year-on-year. Romania kept up with the trend, with office assets accounting for c.62% of the total investment volumes.
The first half of 2019 saw limited deliveries, but we expect a busier second semester. The new supply this year could reach 216,000 sqm, a 50% increase of 2018 and the highest figure since 2011. Non-food retail sales went up by c.10% in the first 6 months of 2019, a better than the full year result for 2018.
The bulk of the demand is concentrated for plots inside the cities, ideally with a zoning permit in place. Currently, there are several significant land deals stuck in various stages of negotiation and duediligence, so the first half of the year was not particularly strong in terms of market turnover.