Residential sales have peaked, the industrial and logistics market has had a towering success, consumers have resumed their spending behavior along with the softening of restrictions, reducing the pressure felt by the retail segment; even the office market, among the first segments to receive the blow of the impact, has had a reasonable recovery, according to the annual report of Crosspoint Real Estate.
“The initial reactions to the effects of the COVID-19 pandemic on the real estate market have been extremely emotional, but after two years we can see not only that most the somber predictions never materialized, but that some sectors have had a surprising evolution during the medical crisis. We could learn from this experience by having a more pragmatic approach to the current geopolitical situation and be more reserved in issuing pessimistic predictions in regards to its effects on the local market. This does not mean, of course, that we should ignore the regional context or that we should expect the Romanian real estate market to remain completely unaffected by it. However, more concrete factors are currently influencing the local market: regardless of the crisis on the northern border, the price of electricity and fuel is high, supply and distribution chains continue to be affected, interest rates will rise substantially to temper the rising inflation. In addition, in Bucharest, the deliveries of new residential projects will be affected in the coming years by the decision of the local authorities to block urban plans, an aspect that will influence both the evolution of new unit prices and the dynamics of the land market and land prices”, said Ilinca Timofte, Head of Research at Crosspoint Real Estate
Institutional investments in residential assets make an appearance on the Romanian market
The investment activity in 2021 was close to pre-pandemic levels, at EUR 909 million, a 13 percent yoy increase.
The evolution of the capital city’s office market in 2021 was characterized by a high number of deliveries (over 240,000 sqm in 10 buildings) which have led to total stock of 3.59 million sqm and a total leasing activity of over 300,000 sqm, 53 percent higher than the one recorded in 2020. Demand was almost equally split between new leases, relocations and renewals in 2021, with expansions making up for only 2 percent of the total leasing activity. Pre-leases accounted for 14 percent in total demand. The total leasing activity in Q1 2022 amounted 64,863 sqm, a very slight decline compared to the first quarter of 2021, out of which 62 percent are new leases, followed by renewals (21 percent).
Romania’s industrial stock reached 5.8 million sqm at the end of 2021. Over 600,000 sqm of new industrial space have been delivered in 2021, out of which 60 percent in Bucharest. The leasing activity amounted to 635,000 sqm, a 14 percent yoy drop but 39 percent higher than pre-pandemic levels. At 173,000 sqm leased in Q1 2022, the industrial market in Romania continues to move forward, although at a slower pace compared to the same quarter of 2021, when over 223,000 sqm of industrial space were leased.
The unpredicted evolution of the residential market in the first year of the pandemic extended throughout 2021, the first 9 months of the year witnessing an even higher demand than in 2020. The residential market’s main issue in 2021 was however the rampant increase in the cost of construction materials, of up to 40 percent compared to 2020. The first quarter of 2022 has however recorded a 20 percent increase in sales compared to the same period of 2021. The sudden change in the geopolitical landscape in February has marked a pause in residential buyers’ appetite, although their interest seems to have partially resumed presently.
