CEN TER - Coldwell Banker Imobiliare

Market Beat
2016
KEYNOTE
02
“The new residential boom.” This is how 2015 was
described for the local residential market and the
statistics confirmed: not only that the market has
recovered but in many cities in Romania, including
Bucharest, peaks recorded during the period
2006-2008 were topped.
While the office and retail segments drew the
attention of investors in 2013 and 2014, last
year was marked by significant investments in
residential projects. The stabilization of prices,
the return of confidence of potential buyers and
significantly improvement of financing conditions
and offers led more and more investors to (re)
start projects that put on the market an offer much
better adapted to current demand.
“The new residential boom” is very different from
what happened before the onset of the economic
crisis. End buyers have completed over 95% of
transactions last year, compared to 2006 - 2008,
when the largest share was held by investors
seeking a profit through resale. This shows a
healthy market.
Furthermore, the purchase of a new house
has become more affordable, a person with an
average income being required a period of less
than 10 years, or less than 120 wages to buy a
one-bedroom apartment in Bucharest, according
to the Coldwell Banker Affiliates of Romania Index
on the affordability of purchasing a new home. In
full ´boom’, before 2008, it was required nearly 400
wages, nearly 33 years!
All the best,
Valentin Ilie, CEO Coldwell Banker Affiliates of Romania
2016 began under uncertainty, talks about the
potential effects of the debt discharge law (datio
in solutum) and the continuation of Prima Casa
program calling maybe into question the viability of
an investment in a residential project development.
Extremely high current rates of absorption, of
over 75% in Bucharest and even over 90% in some
large citites in the country can, at least for now,
partially remove these fears. Real estate arm
of IKEA or Liebrecht & Wood are just two of the
international names that recently announced plans
for residential projects with thousands of homes
that will extend over more than five - seven years.
If investment plans are carried out thoroughly, if
the project draft is well adapted to the target and
the marketing and sales strategy is drawn up and
implemented with the help of professionals with
real experience, I strongly recommend a potential
investor to turn its attention towards the local
residential segment.
I wish you a pleasant reading of the Market Beat
study regarding the residential market in Romania
in 2016 and please take into consideration we are
available for custom analysis and market studies
on targeted segments.
no. 1
Romanian real estate
consulting company
in 2009 according to
yearly financial
results
Coldwell Banker
Affiliates of
Romania
+15
+2.500
residential
projects in
portfolio
apartments sold
in 2015
Content
Macroeconomics ........................................
Bucharest
........................................
Regional markets ........................................
4
11
18
.......................................
.......................................
.......................................
.......................................
18
22
23
24
Center
West South
East
Extract data ...
MACROECONOMICS
/Run
Paul Ichim
Executive Vice-President
ROMANIA – ECONOMIC REVIEW
Market Beat
2016
Export-Import Bank of Romania EximBank
05
In 2015, the Romanian economy grew by a solid
3.8%, posting one of the highest real growth rates
in the EU. The economy’s robust growth was driven
by a surge in domestic demand, with household
consumption increasing by 6% yoy (contributing
3.9 p.p. to real GDP growth), and a much-needed
rebound in investment, with gross fixed capital
fomation increasing by 8% yoy (thus adding 1.8 p.p.
to real growth).
In the current context of low yields and excess
liquidity in the markets, it is likely that some of
these funds will be directed towards productive
Government consumption contributed 0.5 p.p. to
real GDP growth, while net exports shaved off 2.5
2012
Potential GDP (yoy)
Output gap
Nominal GDP (bn EUR)
Headline inflation
At the same time, we expect significantly
improved performance from exports (as the
economic sentiment rebounds in Romania’s main
trading partners) and agriculture (in terms of
agricultural output, 2015 was the worst year
since 2012).
We expect the Romanian economy
to grow by 4% in 2016 on the back
of strong domestic demand, further
supported by the reduction of the VAT
rate from 24% to 20% starting January
2016 and low oil prices, and the positive
trend in investment.
Domestic demand benefitted greatly from the
increase in households’ real disposable income,
mainly due to wage increases and fiscal stimuli
(e.g., a cut in the VAT rate applicable to food
products from 24% to 9% starting June 2015), as
well as the plunge in oil prices.
Real GDP (yoy)
investments, with positive effects on both actual
and potential growth.
p.p. of real GDP, mainly due to weak demand from
the EU, Romania’s main trading partner, and a hike
in imports (9% yoy growth) due to high domestic
demand. Romania’s weak export dynamics is
somewhat surprising in the context of the leu’s
relative stability, both in nominal in real terms.
2013
2014
2015
2016F
0.7
3.3
3.1
3.8
1.1
1.8
2.5
2.8
4.0
3.0
-2.5
-0.8
-0.3
0.0
0.9
134
144
150
158
165
4.95
1.55
0.83
-0.93
1.40*
Private consumption (yoy)
1.2
1.2
3.9
6.0
5.2
Govt consumption (yoy)
0.1
-6.4
0.0
2.5
3.1
Total investment**** (yoy)
0.4
-7.2
2.9
7.7
5.1
Current account (%GDP)
-4.8
-1.1
-0.4
-1.1
-1.5
Budget deficit (ESA)
-3.2
-2.2
-1.4
-1.1
-3.0**
Structural deficit
-2.1
-1.2
-0.7
-1.0
-3.0**
EUR/RON avg.
4.46
4.42
4.45
4.45
4.50
RON REER***
-5.2
0.6
2.1
-3.2
3.0**
6.8
7.1
6.8
6.7
6.6**
Unemployment rate
MACRO
ECONO
MICS
Source: Eurostat, AMECO, NBR.
Note: Forecasts are provided by EximBank, except *) NBR forecasts
and **) European Commission forecasts; ***) Real effective exchange
rate vs. 36 industrial countries, provided by the European Commission;
****) Measured by gross fixed capital formation.
Market Beat
2016
ROMANIA – ECONOMIC REVIEW
06
Pro-cyclical policy measures, aimed at stimulating
demand in the context of a positive output gap,
put Romania’s hard-won gains in terms of budget
consolidation at risk.
However, it should be noted that there are several
risks that could hinder economic growth in 2016.
The slowdown in industrial output and exports,
in spite of contained unit labour costs, highlights
the urgent need for measures on the supply side
of the economy, such as investment and other
measures aimed at increasing productivity,
non-cost competitiveness and making the business
environment more investor-friendly (acording to
The World Bank’s Ease of Doing Business 2016
report, Romania ranks 37th out of 189 countries).
At the same time, the uncertainty
surrounding some proposed legislative
measures (most notably the draft law on
the discharge of debt obligations arising
from credit contracts by transferring
the immovable property to the creditor)
poses significant risks to the economy
and financial stability, as well as to the
provision of credit to the real economy, as
acknowledged by NBR.
Another signifincant risk stems from potentially
deteriorating investor confidence due to the
uncertainties surrounding growth in emerging
economies.
This is especially true in the context of the
projected slowdown of the Chinese economy, as
well as weak expected growth in the EU.
37 th
Romania’s rank in The
World Bank Ease of Doing
Business 2016 report
Nonetheless, the current monetary policy
divergence among the world’s main central banks
might increase the volatility of capital flows in
emerging markets, thus threatening the recent
positive trend in FDI in the Romanian economy.
Other risks that might take their toll on investor
confidence are the current immigration crisis in
Europe, the risk of Great Britain leaving the EU and
the protracted crisis of the Greek banking sector;
however, these risks are expected to have a limited
impact on the Romanian economy.
The recent developments in fiscal policy also
highlight an important risk to Romania’s growth.
These measures include cuts in the VAT for food
(from 24% to 9% as of June 2015), two successive
VAT cuts (from 24% to 20% starting January
2016 and from 20% to 19% as of January 2017), a
reduction in the tax on dividends from 16% to 5%,
as well as eliminating the special construction tax
and extra excise duty on fuel starting 2017.
MACRO
ECONO
MICS
Market Beat
2016
ROMANIA – ECONOMIC REVIEW
07
Corroborated with spending increases (i.e., public
sector wages and expected pension increases) and
taking into account the fact that 2016 is an election
year, Romania’s (ESA) budget deficit is expected
to hover around 3% of GDP in 2016 and 4% in 2017,
which implies a significant deviation from the
Medium-Term Objective (structural deficit of 1%),
thus triggering the Excessive Deficit Procedure.
At the same time, Romania’s public debt is
expected to gradually rise towards 40% of GDP by
2017 and above 60% by 2026, which threatens the
sustainability of public finances in the long-run.
The gap between the growth rates of exports and
imports in 2015 led to a widening of the current
account deficit, estimated to amount to 1.1% of GDP.
This is projected to continue as the strong
domestic demand will likely lead to higher imports;
as such, we forecast a current account balance of
minus 1.5% of GDP as of end-2016.
At the same time, Romania continues to register
modest inflows of foreign direct investment:
net FDI inflows in 2015 amounted 2.8 bn EUR, or
roughly 2% of GDP.
On a positive note, Romania’s improving net
international investment position (from 57.4%
of GDP as of end-2014 to an estimated 51.4%
as of end-2015), thus improving the external
sustainability of the economy.
computed by Eurostat, which registered values
above 2% in the last two months of 2015 and the
first two months of 2016.
40%
In this context, we expect the inflation rate to be
back in the NBR’s target interval in 2017, in spite of
the additional VAT cut from 20% to 19%.
Romania’s public
debt of GDP in 2017
(estimation)
Inflation has exhibited a clear downward
trend over the past three years, hitting
all-time lows in 2015, well outside the
central bank’s target of 2.5 +/- 1 p.p.
This is mainly due to plunging oil prices and the
reduction in VAT for food products discussed
above, with the outlook for 2016 being heavily
influenced by the further cut in VAT from 24% to
20% for all goods and services starting January 1st.
It must be pointed out that given the current
positive output gap (excess demand) and excluding
the transitory effect of the decrease in taxation,
the economy is witnessing inflationary pressures,
as shown by the HICP at constant tax rates
MACRO
ECONO
MICS
Market Beat
2016
ROMANIA – ECONOMIC REVIEW
08
denominated loans; housing loans amounted
to just over 10 bn RON, which represents a 57%
increase over 2014.
The labour market was largely stable
in 2015, with the unemployment rate
decreasing only slightly to 6.7%, one of
the lowest among its peers.
However, it must be stressed that Romania is
facing a constant decline in its working-age
population as result of ageing and net migration
abroad, which means that it is imperative that
the authorities accelerate education and labour
market reforms, as well as support the business
environment in creating jobs for high skilled
workers.
At the same time, the minimum wage increased to
RON 1,050 since July 2015, with a further increase to
RON 1,250 being planned for May 1st, 2016.
Monetary policy was extremely accommodative
throughout 2015, with the NBR operating four 25
bps cuts in the policy rate, from 2.50% to 1.75%, as
well as narrowing the corridor for its lending and
deposit facilities to +/- 1.5 p.p. from from +/- 2.25
p.p.
This measure is aimed at enhancing the
transmission of monetary policy, which is
also supported by the increase in the RONdenominated share of bank loans relative to the
total outstanding amounts (as of end-2015, RON
loans amount for more than half of the entire credit
market).
1
1250
RON
Minimum wage
estimated at May 1st
2016
However, given the current inflationary pressures
(excluding transitory VAT effects, as discussed
above) and the likely overheating of the Romanian
economy (positive and rapidly widening output
gap, relatively low potential growth due to low
investment and weak progress in structural
reforms), we cannot rule out a 25-50 bps increase
in the NBR policy rate towards the end of 2016.
In this policy context, financing costs decreased
significantly during 2015 and banks granted new
loans amounting to approx. 53 bn RON, out of
which 49 bn RON denominated in local currency.
New bank loans to households amounted to
approx. 26 bn RON, out of which 25 bn were RON-
Considering a household comprising two average-income earning members and a savings rate of 25% and a property priced at 60,000 EUR (-10% under the new conditions) for
which a 35% down payment is required.
2
Assuming a median-value mortgage loan, a 150 bps increase in the applicable interest rate and a 10-year reduction of the maturity of the loan.
However, the lending and housing markets face
a serious threat from the draft law on debt
discharge (datio in solutum) which, if passed in
its current form (i.e., with retroactive application,
inter alia), will have two major negative effects:
(i) significant disruptions in retail lending due to
substantially increased down payments (up to 35
– 40% of the property’s value), lower maturities
(by up to 10 years) and increased costs/financial
burden to debtors,
and (ii) a sharp drop in the prices of real estate.
According to NBR estimates 1 he number of years
necessary to raise the required down payment
under the new conditions increases to 7.9 years
from 1.3 years in the case of a Prima Casa Loan
(5% down payment) and 3.8 years in the case of a
regular mortgage loan (15% down payment).
MACRO
ECONO
MICS
At the same time, NBR predicts an average
increase of 44% in the monthly installments for a
RON-denominated housing loan (42% in the case
of a EUR-denominated loan)2.
CONTEXT
Market Beat
2016
+10,4%
09
units
completed
+8%
At the beginning of this year, the
affordability index in what concerns the
purchase of a new home, calculated by
Coldwell Banker, reached an all-time
low in the modern history of the local
residential market
With more than 11,000 units finalized in Bucharest
and in the surrounding areas and a little over
47,000 new houses finalized nationwide, 2015
marked the recovery of the local residential
market, as several regional markets, such as
the ones of Bucharest, Brașov, Cluj Napoca,
Constanța, Sibiu or Timișoara, recorded a greater
number of deliveries compared to the market
peak.
Number of years necessary for buying a one bedroom new apartment in Bucharest with an 50 usable area of 50 sqm
32,8
27
35
30
17,8
25
15,8
15,8
14,5
20
13,3
11,6
15
9,8
10
5
ian.-08
ian.-09
ian.-10
ian.-11
ian.-12
ian.-13
ian.-14
ian.-15
ian.-16
Source: Coldwell Banker Affiliates of Romania, NIS, NBR
The improvement of credit terms, by successive
reductions in bank interest rates and policy rate,
which directly impacts the costs of the funding
granted under the “Prima Casa” (First Home)
program, and wage increases, both in private
and state companies, resulted in an ever growing
number of persons for whom the purchase of a
new home became affordable.
Therefore, it now takes any person less than ten
years to purchase a one bedroom apartment,
given that net average wage and the average
square meter price of a new home, compared to
almost 33 years at the beginning of 2008.
2015
Best year
for the local
residential market
approx.
139.000
Prima Casa
mortgages since
2009
number of
transactions
CONTEXT
Market Research
2016
010
+75%
Absorption degree in
Bucharest in 2015
On this background, developers have accelerated
investments in the residential area and have either
started a great number of new projects or new stages
in existing residential complexes or projects which
were put on hold at the beginning of the economic
crisis, being motivated by the good absorption rates, of
over 70%, before the completion of the construction,
for the projects which are well adapted to the existing
demand.
The number of transactions concluded
last year increased nationwide by about
8%, compared to 2014, over 95% of the
transactions being concluded by end users,
compared to 2006-2008 when the most
of the transactions were concluded by
investors seeking a quick profit by resale.
In 2015 the decrease in bank interest rates resulted in
the resurfacing of investment transactions, the annual
yield in Euros ranging on average between 5% and 7%
but likely to go as high as 9% depending on the project
and the market segment, such yields being much higher
than those provided by bank deposits.
2016 started off with an explosive increase of
the purchases performed by means of Prima
Casa program, on the background of the “Datio in
Payment” law, and a slight increase in the prices
on certain regional markets, on the background of
a relatively low offer.
The stock of new homes which will made
available on the market this year by developers
will most probably be easily absorbed by the
current demand, provided the funding terms
remain as relaxed as they currently are, although
not all the developers will obtain the expected
results, and more and more schemes and means
of funding buyers will appear on the medium
term.
Searching data ...
BUCHAREST
/Loaded
BUCHAREST
Market Beat
2016
012
Offer
sales being recorded for most of the projects during
the construction works stage, in many cases the
buildings being fully sold to the buyers before the
final acceptance date.
While 2015 was the best year in the history of
the residential market of Bucharest and the
surrounding areas, with over 11,000 new homes
delivered to their buyers, exceeding the level
recorded during the market peak, 2016 promises
to set new records, at least in terms of completed
units.
+25%
Increase in delivered
units in 2015
Number of units
14000
delivered in Bucharest
10000
Source:
6000
6721
10192
8045
6721
5786
5790
8337
10110
11082
+14000
The data of Coldwell Banker Affiliates
of Romania shows that over 14,000
units will be delivered this year by the
developers, i.e.a year over year increase
of over 25%.
The good funding terms, the stabilization of the
prices and the fact that the developers have
adapted to the existent demand better and
better resulted in an extremely high degree of
absorption of over 75% last year, significant
NIC, Coldwell Banker Affiliates of
Romania
2016
2015
2014
2013
2012
2011
2010
2009
2008
(est.)
2007
2000
Given that the homes of the projects completed
before 2014 are in their turn gradually absorbed by
the market, even if at a slower pace, we estimate that,
under the current market conditions, the total stock
of homes for sale in residential complexes will reach
approximately 8,500 units at the end of this year,
down by 35% compared to the beginning of this year.
BU
CHA
REST
BUCHAREST
Market Research
2016
013
53,5%
Mass market units
Most of them are projects completed before the
recovery of the residential market, projects which will
probably be sold in full during the following years,
depending on the adopted price strategies, while the
new supply of homes made available on the market
this year will probably be absorbed at a pace similar to
that of 2015.
The good sale rate recorded by the developers of the
current projects is mainly due to a very high level of
adjustment to the demand.
Therefore, 53.5% of the units to be delivered this
year can be classified as mass market units, a market
segment where the purchases made by means of Prima
Casa program account for an overwhelming ratio of
over 70%, depending on the project.
Approximately 12.3% of the total number of units
to be delivered this year – or nearly a fifth of the
mass market category – are low market units,
namely projects with smaller areas compared to
those of the homes built before 1990 which are
located on the outskirts of the city, without direct
access to public means of transport, without
general facilities within the projects and with a
relatively low quality of the construction.
On the middle market segment over 5,500
houses dedicated to the middle class will be
completed this year in Bucharest, in semi-central
areas, in the northern part of the city or in large
neighborhoods which ensure an easy access
to the public transport network – especially to
the subway – and to points of interest, such as
shopping areas or parks.
These projects provide affordable houses, with a good
location in terms of interest points such as shopping
areas or access to the public means of transport and
surfaces similar to those of the old houses.
Low
Market
Mass
Market
Middle
Market
High
Market
700 - 800
Euro / sqm
800 - 950
Euro / sqm
1000-1700
Euro / sqm
+2000
Euro / sqm
Segmentation of residential market in Bucharest
Source: Coldwell Banker Affiliates of Romania
Market Beat
2016
BUCHAREST
014
The reviving of the middle market
segment also materialized by
the emergence of new residential
development poles, such as centerwestern area, Barbu Văcărescu – Aviației
or Văcărești – Tineretului Park area.
The increase in the demand of the potential
buyers resulted in a continuous development of
integrated concept residential projects, providing
a series of facilities and where communities
of thousands of persons have already been
established, being true capital suburbs.
The increase of the purchasing power also led to
the development of the premium homes segment,
mainly characterized by a very good location
and by higher quality surfaces and finishing
works, over 1000 premium and luxury units being
expected to be completed this year in Bucharest.
The boom of the residential market and the
development of the middle market segment
marked the launch of new projects in almost
all parts of the city, after the southern and the
western part of Bucharest were favorites end
for the development of residential complexes for
years on.
Most of the 14,000 homes to be completed in
2016 are located in the western area (22.70%),
followed by the northern area (22.30%) and the
southern area (21.30%).
+1000
+3200
Premium
West
+2800
Central / semicentral
units
to be delivered in 2016
+3200
+3000
North
South
+2000
East
Area segmentation of units under
construction in Bucharest
Source:
Coldwell Banker Affiliates of Romania
Almost 3000 houses will be completed this year in
the semi-central and central areas of Bucharest while
about 2000 new homes will be delivered this year in
the eastern area, which will become one of the main
development poles of the residential segment the
years to come.
BU
CHA
REST
Market Beat
2016
BUCHAREST
015
Demand and Prices
Due to the great number of sales contracted
from the construction stages and the partial
absorption of the homes completed before 2014,
the transactions volume recorded last year on
the residential market of Bucharest and the
surrounding areas reached an all-times high
of more than 10,000 new homes transactions,
purchased almost entirely for residential
purposes, which practically marks the return of
the confidence in the residential market.
The buyers on the mass market segment are
usually young families, who find themselves at
the beginning of their professional career, for
whom the home to be purchased is their first, who
earn less than EUR 1,300 per month per family and
who want a newly built home and not one built
before 1990, even if such new home is located in
big neighborhoods or at the outskirts of the city,
the purchase price and the access to the public
transport network being the key decision maker.
Most transactions are still concluded by means
of Prima Casa program, whose main advantage
consists in the low down payment, although
several financial institutions launched standard
crediting offers with interests similar to those of
the government program.
The increase of the income and the general
increase of the population consumption, in
conjunction with the improvement of the crediting
offers and of the macroeconomic expectations
resulted in the increase of the demand on the
middle market segment, where the number of
transactions made by means of Prima Casa
program accounts for a third of the total number
of transactions, the buyers being usually persons
who are looking for a home upgrade.
Over 10,000 transaction closed last
year in Bucharest
The demand on this segment consists of buyers or
families whose monthly average income exceeds
EUR 1,500, the price not being the only decision
maker, the location, finishing works or facilities
also having a significant weight.
Source: Coldwell Banker Affiliates of Romania
Given that over 1,000 units are to be completed
this year, the premium segment will also record
good absorption rates from persons with a
household income of over EUR 4,000 and who
postponed the purchase of a home due to the low
number of new offers.
Prices remained relatively stable throughout
2015, although they registered slight
increases on certain market segments and
in certain areas as a result of a demand
higher than the offer.
The transaction prices of the mass market segment
normally range between EUR 800 – 950 per useful
square meter, while the average trading prices on the
middle market segment range between EUR 1,200 –
1,400 per useful square meter.
BU
CHA
REST
BUCHAREST
Market Beat
2016
016
Old Market
In 2016, the transactions with old properties
will continue to account for most of the total
transactions concluded in Bucharest in the
residential segment, their main advantage
compared to the new properties being their good
location and the easy access to the points of social
interest, such as educational institutions, shopping
centers or leisure places.
Due to the development of the middle market
segment, more and more new homes were built in
Housing Price Index for two bedroom apartments in
attractive areas, which led to a decrease in the
number of the transactions with old apartments
compared to the previous year.
We estimate that a new house is a valid
option for a potential buyer if its sale
price does not exceed by 20% the price
of an old house located in the same area.
The buyers are willing to pay the price difference
for an increased comfort and for the opportunity
of not purchasing a 35 years old house.
Bucharest build between 1980-1990
140
105
70
35
Source:
Housing Price Index calculated by Ziarul Financiar and Coldwell Banker Affiliates of Romania
Ian. ‘16
Sept. ‘15
Mai ‘15
Ian. ‘15
Sept. ‘14
Mai ‘14
Ian. ‘14
Sept.‘13
Mai ‘13
Ian. ’13
Sept. ‘12
Mai ‘12
Ian. ’12
Sept. ‘11
Mai ’11
0
Oct. ‘08
The trading prices on this segment have increased
slightly during the last 12 months, following the
return of the confidence in the residential market,
and on the background of the current market
conditions. No significant changes are expected
during the following six months in this respect.
BU
CHA
REST
Market Beat
2016
BUCHAREST
017
Forecast
2016 will be marked substantially by the changes in
the Tax Law, while the “Datio in Payment” Law will
also have a certain impact on the funding segment
and implicitly on the residential market.
Nevertheless, the investors and bank institutions
will seek and implement new funding solutions
for the potential buyers, taking into account the
creditworthiness of the existing demand, by
reference to the average income and trading prices.
The share of the middle market segment
will continue to increase in the coming
period.
This will happen due to the expected income
increase and the fact that more and more persons
who purchased a house by means of Prima Casa
program at the beginning of the program, will be
able to sell it and upgrade to a new house with a
better location and with higher quality finishing
works.
The large areas of land available in areas such
as Barbu – Văcărescu, Regie, Theodor Pallady,
Expoziției or Sisești will continue to be of interest
for the residential projects developers, and
therefore we expect an increase in the number of
units to be completed in these areas during the
following years.
Given the current market conditions, the homes
which will be completed this year will most
probably find their buyers.
However, there will be developers who will not
record the expected results, mainly because of
the non existing demand. Meanwhile, there are
already developers who have a more than six
months delay in delivering announced projects.
BU
CHA
REST
Analyse multiple data ...
Regional markets
/Merged
Market Beat
2016
CENTER
019
Cluj Napoca
2300*
1236
1500*
1220
907
889
Source:
NIS, Coldwell Banker Affiliates of Romania;
* Coldwell Banker Affiliates of Romania estimation
2016
2015
189
457
2014
2012
398
2013
1126
2011
The residential projects of Cluj Napoca will be
supplemented by the ones of Floreşti, where we
estimate that approximately 1,500 new units, all in
the low market segment, will be completed this year.
Units delivered in Cluj Napoca between 2007-2016
2010
Most of these units are part of the mass and
middle market segment, in projects such as
Bonjour, Contemporano, Platinia or Sophia,
but the premium segment has also developed
significantly, Riviera Luxury Residence being
completed in 2015.
Cluj Napoca will remain one of the main residential
markets of Romania, due to the foreign investments
in the area but also due to the population migration,
Cluj Napoca attracting tens of thousands of students
annually. In the medium term, new residential
development poles will appear, such as the area
of Parcul Feroviarilor, which benefits from a
public project for the rehabilitation of the urban
infrastructure, or Colonia Sopor, which has a great
location and large available plots of land.
2009
Approximately 2,300 new units will be completed
this year in the city, up by nearly 50% compared to
2014, according to the data provided by Coldwell
Banker Transilvania.
Absorption of units
delivered in 2015
We estimate that this high degree of absorption will
continue in 2016, depending on the developments in
the funding conditions, while prices will no longer
have any reason to go up.
2008
Constructions in the residential area boomed,
driven by the current high demand coming
from young people who are high education
graduates of Cluj Napoca or working in one of the
multinationals which opened an office in the city
during the last few years, the estimated number of
corporate employees being over 20,000 people.
100 %
The degree of absorption was of about
95% in 2015, which is one of the reasons
why the prices of new homes of ClujNapoca increased by over 10% during the
last nine months.
2007
Cluj Napoca is considered the second residential
market after Bucharest, due to the high number of
residential projects completed during the last few
years but also due to the price increases of the
last 15 months.
CEN
TER
Market Beat
2016
CENTER
020
Brașov
1750*
1500*
763
604
713
2013
987
2012
949
762
906
Source:
NIS, Coldwell Banker Affiliates of Romania;
* Coldwell Banker Affiliates of Romania estimation
2016
2015
2014
2011
283
2010
Prices will remain stable during the following
period, the price prices ranging between EUR 650
and EUR 750 per usable square meter on the low
market segment, between EUR 750 and EUR 900
per usable square meter on the middle market
segment and between EUR 950 and EUR 1,250
euro per useful square meter on the premium
segment, luxury homes being sold for an average
price of EUR 1,500 / usable sq.m.
Units delivered in Brașov between 2007-2016
2009
Residential developers of Braşov currently
have about 1,750 homes in progress, with
delivery terms in 2016.
Potential annual
renting yield
The foreign investments undertaken in the area by Ina
Schaeffler, Draxlmaier, Stabilus or Immochan as well
as the medium-term attractiveness of the city for new
investments in the industrial segment will keep Brasov
in the range of interest of developers of residential
projects.
2008
The degree of absorption rose to almost 100%,
as the homes that were completed the previous
year and that have not been sold so far will be
absorbed in the near future.
6,5 %
The recovery of the residential market also marked the
revival of the interest in the investment segment, with
buyers who purchased a home for leasing purposes,
the annual yield in Euros being of approximately 6.5%.
2007
2015 can be considered the comeback year for
the residential market of the city at the foot of
Tampa mountain, with over 1,500 units sold in
projects such as Avantgarden, Isaran or Sanpetru
Residence, up by 50% compared to the previous
year.
CEN
TER
Market Beat
2016
CENTER
021
Sibiu
Bistrița
Sibiu has lately been the largest residential
development market, together with Cluj
Napoca, the data provided by Coldwell Banker
showing that more than 2,000 new homes were
completed last year in the city
The data of Coldwell Banker shows that a low
number of homes located in residential complexes
was made available in Bistrita in 2015, while
approximately 270 units 2016 will be finalized in
2016, most of them being located in areas such as
Libertății, Sub Cetate and Crinilor. Prices remained
relatively stable throughout 2016, as new onebedroom apartments sell for prices ranging between
EUR 25,000 and EUR 45,000, depending on their
location, while new houses sell for prices that start
at EUR 55,000.
At this time around 3,500 new units
are in various stages of development
being scheduled for delivery in 2016,
if the developers meet the announced
deadlines.
+ 5,500
Units delivered in
Sibiu in 2015-2016
Units delivered in Bistrița between 2007-2016
The absorption rate of the new recently
competed homes has been very high, Sibiu being
characterized by an economic effervescence, as
the investments made by the German companies
in the area, such as Continental and Marquardt
Schaltsysteme, but also other companies in
different business areas (Ambient, Polisano,
Compa etc.), resulted in the development of a
group of good solvency buyers.
828
525
485
361
265*
Source:
NIS, Coldwell Banker Affiliates of Romania;
* Coldwell Banker Affiliates of Romania estimation
Deva
500 units were delivered in Deva during the last two
years, new one-bedroom apartments selling for
prices ranging between EUR 40,000 and EUR 48,000,
compared to EUR 25,000 –EUR 35,000 for similar old
apartments.
The data provided by Coldwell Banker shows that
approximately 100 units will be delivered this year in
Deva, in Grigorescu neighborhood.
2016
165*
2015
253
2014
2012
2011
2010
2009
2008
83
171
2013
176
2007
The Vest-Turnisor area has been a residential
complexes construction pole, as several projects
are currently in progress which include from a
few tens of units to over 1000 units. All these
will be supplemented by a few more hundreds of
apartments in projects such as Alma, Belvedere
or Magnolia Residential Complexes. The prices
of a new apartment one-bedroom apartment in
Sibiu range between EUR 30,000 and EUR 50,000,
depending on the market segment they belong
to, while houses are sold for prices that start at
EUR 85,000. By comparison, old one-bedroom
apartments sell for prices ranging between
EUR 30,000 and EUR 45,000, depending on their
location.
CEN
TER
CENTER
Market Beat
2016
022
Târgu-Mureș
Miercurea Ciuc
About 200 new residential units will be
completed this year in Targu-Mures, compared
with approximately 250 the previous year,
according to the data provided by Coldwell
Banker. The most important development area
in the city is Tudor neighborhood, followed by
the Cantemir area. Prices of new one-bedroom
apartments range between EUR 38,000 and EUR
55,000, compared to the prices for similar old
apartments which range between EUR 30,000
and EUR 45,000, while new houses sell for prices
that start at EUR 100,000.
Miercurea Ciuc is also one of the local residential
markets where only a few tens of units are
completed annually, according to the National
Institute for Statistics. Prices of new apartments
range between EUR 650 and EUR 850 per square
meter, while old apartments sell for prices which are
up to 50% lower.
Units delivered in Târgu-Mureș between 2007-2016
250*
222
210*
194
2016
64
2015
2012
68
2014
74
2013
65
2011
2010
2009
91
2008
2007
107
Source: NIS, Coldwell Banker Affiliates of Romania;
Sfantu George is also one of the poorest county
capital cities of Romania in terms of newly developed
residential complexes, as between 40 and 50 homes
are built on average annually from private funds.
Alba Iulia
About 200 units located in residential projects
will be completed this year in Alba, down from
approximately 270 units in each of the past three
years. New one-bedroom apartments sell for prices
ranging between EUR 35,000 and EUR 45,000, the
most important development area being Cetate area.
Units delivered in Alba Iulia between 2007-2016
307
263
270*
190*
Source: NIS, Coldwell Banker Affiliates of Romania;
* Coldwell Banker Affiliates of Romania estimation
2016
2015
2014
2013
2012
134
2011
2010
2009
246
227
122
2008
Prices of old one-bedroom apartments range
between EUR 20,000 and EUR 35,000, while new
ones sell for prices starting at EUR 50,000.
254
173
2007
Zalau, the capital city of Salaj County, has one
of the lowest residential markets in the central
area of the country, with only a few tens of units
scheduled to be completed this year.
500
Units delivered in
Târgu Mureș in
2015-2016
Sfântu Gheorghe
* Coldwell Banker Affiliates of Romania estimation
Zalău
+
CEN
TER
Market Beat
2016
WEST
023
Timișoara
Oradea
Baia Mare
During the last few years the biggest local real
estate market in the western part of the country
was the scene of major investments in the office
and commercial spaces segment, the residential
segment being targeted by the investors only
recently.
Last year, the capital city of Bihor county was one
of the most important residential markets in the
western part of the country, with approximately 500
completed units.
The capital city of Maramures county is the smallest
residential market in the western part of the country,
with about 100 units completed annually, according to
the INS data.
The local investments which will be made by
Eberspacher or Faist Mekatronic will generate nearly
1,000 new jobs, an upward trend being recorded for
the local economy during the last few years. 2016
is expected to be similar in terms of the residential
segment of the local market, as several hundreds of
units will be delivered from several projects such as
Ioșia, Prima or A-Red.
However, new one-bedroom apartments sell for prices
which are slightly higher than those of Satu Mare i.e.
EUR 32,000 – EUR 38,000 in the central area and EUR
26,000 - EUR 30,000 for one- bedroom apartments
located in the semi-central area.
The data provided by Coldwell Banker shows that
approximately 1,000 units located in residential
complexes are currently in progress in Timisoara,
compared to 2015 when about 650 units were
completed in the city, the most important
projects being Venus, Uranus or Adora Forest.
Timisoara will experience an exponential growth
in the residential segment during the coming
years, as large-scale projects such as City of
Mara have already been announced.
Sale prices range between EUR 42,000 and EUR
48,000 for one- bedroom apartments located in
the central area and between EUR 32,000 and EUR
39,000 for one- bedroom apartments located in the
semi central area, while house prices start at EUR
45,000.
Arad
About 600 homes were completed last year
in Arad, up by over 30% compared to 2015,
according to the data provided by Coldwell
Banker.
And approximately 200 more units are planned to
be completed by Ared in 2016. In terms of prices,
new one-bedroom apartments, located in the
center of Arad, currently sell for prices ranging
between EUR 42,000 and EUR 48,000, while the
average price for houses ranges between EUR
40,000 and EUR 62,000.
Units delivered between 2007-2016
2007
2008
2009
2010
2011
2012
2013
2014
2015*
2016*
Timișoara
536
719
467
421
413
413
403
519
650
1000
Arad
822
1088
572
203
286
216
241
428
558
650
Oradea
635
1377
807
536
613
543
388
396
500
700
Satu Mare
209
496
386
141
135
108
112
107
141
85
Baia Mare
115
258
272
241
123
116
138
91
96
100
Source: NIS, Coldwell Banker Affiliates of Romania;
* Coldwell Banker Affiliates of Romania estimation
Satu Mare
About 150 residential units were completed last year
in Satu Mare, up by 50% compared to last year, by
Davilas, Zirmer-Bud and Austria Invest.
New one-bedroom apartments sell for prices which
range between EUR 30,000 and EUR 34,000 while
houses sell for prices that start at EUR 40,000.
VEST
Market Beat
2016
SOUTH
024
Background
Pitești
Constanța
Most of the county capital cities in the southern
part of Romania have small residential markets
with only a few tens of units completed annually,
the lowest national values being recorded in
Resita and Tulcea, where less than 15 homes were
completed in 2014, according to the INS data.
The capital city of Arges county has one of the most
dynamic residential markets in the southern part of
Romania, with over 500 residential units planned for
development in 2017.
This seaside city has the largest residential market in
the southern part of Romania, after Bucharest, with
more than 2,000 units completed annually according
to the data provided by Coldwell Banker Affiliates of
Romania.
Furthermore, we estimate that the city will
experience a significant development on the offices
spaces segment. The average prices on the new
apartments segment range between EUR 700 and
EUR 1,000 per square meter, the trend being one of
stabilization.
Apartments sell for prices which range between EUR
650 and EUR 900 per usable square meter, while
houses sell for prices which start at EUR 250 per
usable square meter.
Craiova
Craiova is the largest residential market in the
south-western part of Romania, with more
than 500 units completed last year, according
to estimates of Coldwell Banker. The most
important projects developed in the city during
the last few years or currently in progress include
Magnolia, Safta Residence, Bujorului Residence
or Satul German.
The cheapest one-bedroom apartments are
found in Craioviţa and Corniţoiu areas, where
the average price per square meter is EUR 750,
while the prices of the apartments in Bujorului
Residence for example go as high as EUR 1,000
per square meter.
The average term development potential will
remain high due to the investments announced
by Ford or other companies such as ETI, one of
the largest food companies in Turkey.
Ploiești
Being one of the main residential markets in
Muntenia and due to its proximity to Bucharest,
Ploiesti attracted major investment from developers
also present in Bucharest, such as Adama, Irish
Park or Mica Romă being two of the most important
complexes.
Units delivered between 2007-2016
2007
2008
2009
2010
2011
2012
2013
2014
2015*
2016*
510
544
492
399
227
270
426
496
550
700
Pitesti
251
433
658
201
243
189
240
192
200
200
Ploiești
208
71
156
119
201
186
125
76
100
200
Constanța
659
795
1783
992
1305
920
1594
1419
+1600
+2000
Craiova
Source: NIS, Coldwell Banker Affiliates of Romania;
Sales prices for new one-bedroom apartments range
between EUR 38,000 and EUR 47,000, compared to
similar old homes which sell for prices that start at
EUR 29,000 and can go as high as EUR 44,000.
* Coldwell Banker Affiliates of Romania estimation
SUD
Market Beat
2016
EST
025
Background
Suceava
According to the INS data, the eastern region of
Romania is a small sized residential market, only
a few tens of units being finalized in all county
capitals cities annually, except for Iasi, Bacau and
Suceava.
Suceava is the most developed market of the northeastern region of Romania, with approximately
150-200 units finalized annually in residential
projects. The average prices per square meter start
at EUR 700 and can go as high as EUR 900.
Iași
The traditional capital city of Moldova region is
also the most developed regional market, with
approximately 1,400 units in development in the
city this year, up 40% compared to the previous
year, according to the data provided by Coldwell
Banker Affiliates of Romania.
The flow of students, the investments made
by the IT and services companies but also the
offices spaces and retail projects made Iasi ever
more attractive for the developers of residential
projects, projects such as Lazăr Residence,
Concept Residence, Newtown Residence and Lake
District being currently in progress.
Sale prices per square meter start at EUR 1,250
for the new apartments located in central areas
and at EUR 900 for new apartments located in
semi-central areas, while old apartments have
prices that are up to 25% lower.
EST
Market Beat
2016
Coldwell
Banker
026
3,000
45
212
86,000
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