Real estate investments have gained momentum in the last year, a trend that will continue in 2016, when a record area of over 700,000 sqm will be delivered. More than 800 million euros will be invested in office buildings, retail, logistics, and industrial projects. The office segment will remain the star of the year, but specialists estimate that the major projects to be delivered will put pressure on rents.
investmentsThe year 2016 promises to be a busy one, with a record area of projects set to be delivered: over 700,000 sqm, representing a total investment of more than 800 million euros. The possibility of high profits attracts major investors to Romania, with their attention drawn particularly to the office building segment, followed by retail projects and logistics and industrial ones.
The largest office projects delivered in 2016:
Bucharest One (50,000 sqm), developed by Globalworth; investment of 95 million euros
HBC 2&3 (45,700 sqm), developed by Atenor
Oregon Park (45,000 sqm), developed by Portland Trust; investment of 90 million euros
Metropol (36,000 sqm), developed by Anchor Group; investment of 20 million euros
The Landmark (22,000 sqm), developed by Proiect Bucuresti; investment of 30-40 million euros
Metroffice (20,000 sqm), developed by Immofinanz; investment of 35 million euros
However, the intensification of activity also has side effects, say specialists: the high number of projects will lead to an increase in the vacancy rate and will put pressure on rents.
„After a year 2015 in which the vacancy rate in the office market decreased to about 13.1%, and rents remained constant, the high level of new deliveries will result in a resumption of the growth in the vacancy rate and, consequently, a slight downward trend in rents, given constant demand in recent years,” explains Marius Scuta, National Director, Head of Office Department and Tenant Representation JLL.
Over half of retail projects will be delivered in Bucharest
In the retail market, projects totaling over 237,000 sqm will be delivered, which will lead to an approximately 10% increase in the current stock, estimated at 2.8 million sqm. Most deliveries are new projects (85%), and Bucharest will attract more than half of these investments (125,000 sqm).
The largest retail projects with a delivery date in 2016:
Park Lake Plaza Bucharest (67,000 sqm), developed by Sonae Sierra/Caellum Development; investment of 180 million euros
Shopping City Timisoara (55,700 sqm), developed by NEPI; investment of 81 million euros
Piatra Neamt Shopping City (29,000 sqm), developed by NEPI; investment of 34 million euros
Mega Mall Satu Mare (27,000 sqm), developed by NEPI; investment of 28 million euros
Veranda Mall Bucharest (25,000 sqm), developed by Prodplast Imobiliare; investment of 60 million euros
„It is expected that Romania will record an annual consumption growth of 4-5% in the next two years, and in addition, the projects to be delivered next year are located in cities where economic indicators support such investments. For this reason, we do not see a significant influence on rents or the market in general,” says Adelina Oprita, Retail Agency JLL consultant.
By the end of this year, logistics and industrial projects of 15,000 sqm are scheduled for completion, so the total stock of modern spaces stands at approximately 2 million square meters, with about 195,000 sqm to be delivered in 2016.
The largest logistics and industrial projects with delivery in 2016:
P3 Logistic Park Bucharest (pre-leased by Carrefour, 81,000 sqm); investment of 35 million euros
Log Center Mogosoaia (multi-tenant, 40,000 sqm); investment of 32 million euros
Etarom 3 Cluj (pre-leased by Henschel, 36,000 sqm)
CTPark Cluj (pre-leased by Profi, 23,000 sqm)
Log Center Ploiesti (tenant Profi, 15,000 sqm)
„Even if we see an increase in development activity for industrial and logistics projects, investors still remain cautious on the logistics side, so most of the spaces will be built based on a pre-lease contract; most projects are extensions of major existing parks, which also shows a reserved approach by developers who prefer phased construction. Regarding industrial spaces for production, developers choose investment destinations based on the availability and costs of the labor force required by the companies that will lease the spaces,” concludes Cristina Pop, Head of Industrial Agency JLL.
Source: Imopedia/Media
Frequently Asked Questions
What is the total value of real estate investments estimated for 2016?
It is estimated that over 800 million euros will be invested in office, retail, logistics, and industrial projects during 2016.
Which are the largest office projects scheduled for delivery?
Among the largest projects are Bucharest One (50,000 sqm), HBC 2&3 (45,700 sqm), and Oregon Park (45,000 sqm).
How will the rental market be affected by the new office space deliveries?
Specialists estimate that the high volume of new deliveries will put pressure on rents, leading to a slight downward trend.