JLL - Bucharest City Report Q2 2018

27 August 2018

JLL - Bucharest City Report Q2 2018

Overview

The City Reports cover key trends in the economy and recent trends in the investment, office, retail and industrial markets. In this edition, JLL brings you her second quarter update on Bucharest Romania 

Published August 2018

Investment Market

The H1 2018 property investment volume for Romania is estimated at circa €205 million, a value almost half the one registered in the same period in 2017 (€481 million).

However, there are a number of transactions in different stages of negotiations that are likely to be concluded during the remainder of 2018.

The number of transactions decreased, however, the average deal size increased, standing at approximately €40 million.

Bucharest accounted for over 78% of the total investment volume, mainly due to a very large office transaction which was closed in Q2.

Market volumes were dominated by office transactions (88%), while retail accounted for 12%. 

The largest transaction registered in the first half of 2018 was the acquisition of Oregon Park, a 68,500 m² office park in the Floreasca Barbu Vacarescu sub-market in the north of Bucharest by Lion’s Head Investment. This is the first acquisition of the fund created by the joint-venture between South African investment fund Old Mutual Property and AG Capital in Romania and follows previous investments in Sofia, Bulgaria. 

The macro-economic forecast for Romania continues to be positive, despite some recent concerns. On the financing side, terms and conditions are getting closer to what can be expected in the core CEE markets. Consequently, sentiment is strong, with a total volume for 2018 estimated to reach the €1 billion mark. 

Prime office yields are at 7.5%, prime retail yields are at 7.00%, while prime industrial yields are at 8.5%. Yields for office and industrial are at the same level as 12 months ago, while retail yields have compressed by 25 bps over the year. There is a very soft downward pressure on yields, however, in 2018 we do not expect any compression due to the lack of prime product transactions. 

Source: website JLL