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Real estate : Real estate investments, the lowest volume in the last 7 years
In the first semester of the year, Romania registered the lowest volume of investments since 2005.
In the first 6 months of 2012 only two transactions of 55 million euro were concluded – the sale of Nokia factory by De Longhi and the purchase of the complex City Business Centre in Timisoara by NEPI, according to the mid year report of CBRE Romania about the investment market.
Romania continues to be an attractive market, but the lack of financing and problems in the euro area have determined an increase of the investment risk in the analyzed period, the report shows. In Central and eastern Europe the highest investment volume was recorded in Russia and Poland. James Heyworth Dunne, head of capital markets and valuation department of CBRE Romania showed that the Romanian market is still attractive for foreign investors on the background of the difference registered at the level of prime profitability compared to neighbour countries in Central and Eastern Europe. The lack of financing and problems in the euro area have led to a low investment volume in the first part of the year, determining the increase of investment risk, a slowing down of the decision making process and the increase of the time for completing transactions.
The sale of City Business Center Timisoara to the South African investment fund New Europe Property Investment (NEPI) was the biggest transaction in the first 6 months of 2012. At present, the office complex City Business Center is rented to companies like IBM, PwC, Vodafone, Alcatel-Lucent, BCR, Deloitte and Microsoft. The project includes two office buildings, one of them still under construction. NEPI is a very active player in Romania, its portfolio including commercial and storage areas besides office buildings.
The second transaction concluded in the first part of 2012 was the sale of Nokia factory (35,00 square meters) in Cluj county for 10 million euro to De Longhi household producer. The new owner intends to start production this fall.
Prime profits stabilized in Romania on the three markets: retail (commercial areas and street vending), offices and industrial. On the office segment the profitability stabilized at 8% based on investors’ offers in the local market, while in the retail and industrial segments maintained at the level of 8.75% (commercial centers) and 10.25% (storehouses).
In Warsaw, in the first quarter of the year, prime profitability on the office segment was 6.25%, the industrial one 7% and the retail domain registered a level of 6%. A similar level of prime profitability was in Prague with 6.50% for offices, 8% for industrial and 6.25% for retail. Budapest registers for the office, industrial and retail segments prime profits of 7.25%, 8.75% and 7%.
In the first part of the year, in Central and Eastern Europe, Russia registered the highest investment volume of over 900 million euro, followed by Poland with over 800 million euro and the Czech Republic with 180 million euro.
In Romania the first six months of the year were dominated by local elections and the continuation of reforms to maintain economic stability. The objectives of the National Bank of Romania and of IMF (inflation rate and budget deficit) were reached and continue to be monitored attentively until the end of the year. In May the inflation rate was 1.79% while the maximum level established by BNR for 2012 is 3% and the reference interest rate dropped by 0.25% every month since January to March the present value being 5.25%. According to Eurostat investment expenses were 2.5 billion lei in January 2012.