Real Estate Market Forecast
From the significant investors in real estate to the Cadastre Agency, everybody agrees that the amount of transactions on the market has shrunk lately. Still, beneath this decrease, there is a whole lot of opportunities that I suggest should be taken into account.
- Land: According to Colliers International, in some cases, the rates are half the ones in the timeframe 2007-2008, the top year of the real estate bubble in Romania. These circumstances are favorable to those who envisage a complex development project. Strictly speculatively, the liquidity of land is, however, very low.
- Houses/apartments: By 40% lower than the top years, also according to Colliers International. The dwelling sales nevertheless dropped at the beginning of last fall (52,000 housing units, by 9,000 less than in 2017). Neither do the “First House” mortgage loans work very well: the banks have extended the terms for the program submissions. I nevertheless believe that the residential sector is a medium-long term business.
- Offices: They continue to be the star of the market. This is on what I have relied as well and I am glad I have played correctly with a recent transaction very important to me. In brief, whatever office space was built during the recession has been occupied and the market has the ability to absorb the newly created spaces in the following years. According to Cushman & Wakefield Echinox, this type of building will continue to be a market growth engine. Of course, it is also worth noting that this segment has been very dynamic in big cities, such as Cluj or Iași, where the economic growth requires spaces for businesses.
- Retail. Commercial spaces have increased by 4.6 times as against the level before the crisis, whereas the street retail has drastically dropped, except for the so-called traditional fairs. Experts forecast the development of large commercial areas for the real estate global players. Proof of that is one of the record deals of this year: the purchase of the retail park Militari Shopping in Bucharest, for EUR 95 million by Prime Kapital and MAS Real Estate.
Developments over the Next Few Years
All experts I have been speaking to agree on the fact that the real estate market in Romania has entered a phase of maturity. The recession of which everybody has been speaking about lately will affect the real estate market in a much nuanced way. It is hard to believe that we will witness again soon a bubble followed by somewhat similar to a crash, as it happened after 2007. On the contrary, the long term development of the local economy will turn real estate in a more and more important (in volume) and lucrative market. The change of essence refers to what I have already said on a different occasion, namely that the segment is changing from a speculative one into one in which specialization and smart intelligence development strategies matter more and more.
For the information in this analysis, I have used the following sources: