• Mon. Nov 28th, 2022

The appetite for real estate investments remains high; transactions of approximately €1.2 billion are in various stages of negotiation

ByWillie M. Evans

Aug 23, 2022

Real estate investment deals worth around 1.2 billion euros are currently in various stages of negotiation, with appetite for income-generating assets remaining at high levels, according to data from the advisory firm. in real estate Cushman & Wakefield Echinox.

Since the beginning of the year, the total investment volume has reached more than 600 million euros, of which 315 million euros represents the volume processed in the first half, while other transactions of around 300 million euros were closed in July and August, a period generally characterized by less activity.

Cristi Moga, Head of Cushman & Wakefield Echinox Capital Markets:

“The appetite for real estate acquisitions for investment purposes remains high despite the accelerated rise in bank interest rates, as institutional investors with access to capital see it as a way to protect themselves from the effects of inflation. Against this backdrop, market liquidity remains robust and most trades currently under negotiation continue without significant changes. Office buildings, the most traded asset class over the past four years, have retained their attractiveness in a context of the gradual return of employees to their offices, with a marked interest also for retail parks and large surfaces.

The most active segment in the first half was that of offices with a 65% market share of the total volume handled, followed by the retail (17%) and hotel (6%) sectors.

The largest transaction in terms of volume was S Immo’s acquisition of Expo Business Park, a 41,500 m² GLA office project located in the Expozitiei area (an emerging office submarket of Bucharest), from from Portland Trust for an estimated price of over €110. million. In addition, Indotek continued its expansion in the local real estate market by acquiring two medium-sized office buildings in Bucharest.

In fact, most transactions were for assets located in Bucharest, with the capital holding a solid 83% share of the investment volume in the first half of 2022.

Prime rates stabilized in H1, with only the industrial and logistics segment registering a compression of 25bp. Going forward, we expect to see some sort of pressure on exit yields, primarily due to rising interest rates. However, the gap between Romania and other Central and Eastern European markets, such as the Czech Republic, Poland or Hungary, remains relatively high in all market segments (generally around 100 to 300 basis points), thus illustrating the attractiveness of the local market.

Cristi Moga, Head of Cushman & Wakefield Echinox Capital Markets:

“Having rents in euros, lease contracts and indexation coefficients applicable to European Union inflation, real estate assets with an institutional profile, which benefit from a mix of first-rate tenants, will continue to attract the interest of local investors and international. The foundation of this interest is still represented by tenants, be they retailers, distributors, banks or IT companies, whose evolution has remained on a generally positive trend despite all the difficulties of the last 30 month “.