Property Market Report - October 2010

Research
Department
October
2010
Property
Market Report
R
O
M
A
N
I
A
• By the end of 2010 Romania is not expected to significantly improve its economic conditions causing a relatively property market standstill. The situation differs from other countries in S/E Europe, which started to recover,
due to Romania’s challenging business environment.
POLAND
UKRAINE
ROMANIA
SERBIA
BULGARIA
GREECE
• The office market, the economic downturn led to an increase of vacancy
rate, a significant decrease in rental rates mainly due to the lack of pre–
leases and the high rate of projects’ delayed delivery date.
• Retail market is characterized by a significant rental rates decrease on high
street retail as well as by postponement or cancellation of new shopping
centers developments until the recovery of the economy climate.
• Logistics market was characterized by weak investment activity, relatively
low demand and supply levels compare to the booming years, some relocations and rental rates renegotiations in order for the tenants to reduce the
storage and transfer costs.
Disclaimer
The present advertising brochure
«Property Market Report» has been issued by
EFG Eurobank Property Services S.A.
Editor in charge:
DIMITRA MARINI
Research Group:
DRAGOS DIACONU
Date
October 1, 2010
This report has been issued for advertising purposes by EFG Eurobank Property Services S.A., a member of the EFG Group,
and may not be reproduced in any manner or provided to any other person. Each person that receives a copy by acceptance
thereof represents and agrees that it will not distribute or provide it to any other person. This report is not an offer to buy or
sell or a solicitation of an offer to buy or sell the real estate mentioned herein. EFG Eurobank Property Services S.A. and others
associated with it may have positions in, and may effect transactions in the real estate mentioned herein, and may also provide
or seek to provide services (investment banking, brokerage or other) for those companies. The investments discussed in this
report may be unsuitable for investors, depending on the specific investment objectives and financial situation. The information
contained herein has been obtained from sources believed to be reliable but it has not been verified by EFG Eurobank Property
Services S.A. The opinions expressed herein may not necessarily coincide with those of any member of the EFG Group.
No representation or warranty (express or implied) is made as to the accuracy, completeness, correctness, timeliness or
fairness of the information or opinions herein, all of which are subject to change without notice. No responsibility or liability,
whatsoever and howsoever arising is accepted in relation to the contents hereof by EFG Eurobank Property Services S.A. or
any of its directors, officers or employees. This is an advertising report and is distributed free of charge.
Economy
T
Romania: Key Macroeconomic Indicators
he global financial crisis has significantly affected the Romanian and
the other European countries’ economy. During 2009, the countries’
national key macroeconomic indices were characterized by downward
pressures, a trend which continued during 2010.
Western economies started to recover at a stable rate (UK, France and
2008
2009
2010f
2011f
Real GDP (yoy%)
7.3
-7.1
-2.0
1.5
CPI (annual average yoy%)
7.9
5.6
6.5
4.5
Unemployment Rate (% of labor force)
particularly Germany) triggering an improvement on exports, resulting in a
Current Account (%GDP)
more balanced GDP during 2010, however the year-on-year remain a negative
Exports (%yoy)
growth. It is expected that the GDP will present a consistent positive growth
rate starting with mid 2011.
Inflation is expected to conclude below 7% for 2010 and more than 4% in 2011,
Policy Rates
4.0
6.3
9.0
7.5
-11.6
-4.4
-5.5
-6.0
8.7
-5.5
20.0
10.0
current
3M
6M
12M
6.25
6.25
6.25
6.50
Source: Eurobank EFG Research & Forecasting Division
as a direct effect of VAT increase to 24% from the previous level of 19% (starting
from July 1st). A supplementary factor against a quick economic recover was
the restrain package plan announced by the government (on July 1st): 25%
wage decrease for the public authorities’ employee and the announced sack of
75,000 personal. The unemployment rate is expected to remain in high levels
in 2010 (close to 9%) resulting in a private consumption limitation.
Romanian National Institute of Statistics announced that in first half of 2010
the construction sector decreased by 16% compared to the same period of the
previous year. Although the decrease has become less steep than the first
quarter of the year (- 20%), the trend is still a descending one. The residential
sector has recorded the highest decrease with – 34%, in 1st semester of 2010
compared with 1st semester of 2009.
While in 2009, the banks have competed for private savings by increasing the interest rate, in 2010 the situation has reverse and the interest rate
for deposit is on a descending trend. The exchange rate has been maintained stable between 4.2 and 4.3 RON / EUR, in spite of some speculative
attacks on RON.
ROMANIA • October 2010
2
Property News
T
he level of investment transaction has increase considerably in the first
park was developed by Avrig 35, which at the same time has bought back
half of 2010, recording a value higher than the entire year 2009. How-
some commercial assets situated in Constanta from the same fund (NEPI).
ever most of the transactions have been transfer of shares between
The largest land transaction was made by Interprime Properties – an in-
co-developers of the same projects. The nominal value totals more than 500
vestment Fund linked to IKEA – which bought 5 ha in central Bucharest from a
million Euro. Under the current economic situation, the first distressed assets
former industrial facility – Timpuri Noi and is planning a mixed development.
transactions are projects in early stage of development, with good potential.
The value of transaction is announced at just below 35 million Euro.
A premium transaction was part of a larger acquisition of Europolis portfolio
In a smaller transaction, one of the co-developers of City Gate was bought-
by CA Immo with assets like: two office buildings in Sema Park, Europe House,
off by GTC, the main partner in the project. A similar situation was registered in
Europolis Logistic Park and two plots central for office projects. Another im-
Constanta, where Immofinanz has taken-over the Trigranit part. At the same
portant transaction was made in Pitesti, where NEPI Investment Fund bought
time with the exit in Constanta, Trigranit has bought 50% from the shopping
the big box section of Iris Shopping Centre (Auchan and Bricostore). The retail
mall Atrium Centre in Arad, where it acted as the main contractor.
ROMANIA • October 2010
3
Infrastructure
R
omania scores rather low in terms of infrastructure taking into ac-
signed a finance contract in order to provide financial support amounting to
count that the transport road network stands at much lower level
€395 million for building a new metro (underground) line in Bucharest. The
than the Western Europe mainly due to the limited investments and
investment will cover the construction the construction of Line 5 Drumul Tab-
maintenance. Several projects were planned by the Government amounting to
erei-Opera on the section Drumul Taberei-Universitate, being the most con-
€10 billion in order to upgrade the main roads and improve the accessibility
gested part of the city.
to large areas; however most of the investments were put on hold due to the
The loan comes additionally to previous investments made for the un-
current economic condition. European Union has been able to offer €3.4 billion
derground network modernization. The project will be carried out by the SC
through development projects, nevertheless the absorption percentage is still
Metrorex and it is estimated to be completed by the end of 2015 – for the first
the lowest among EU’ countries.
phase. The total investment amounting to €883 million includes a new line
Concerning Bucharest, in late 2009, the European Investment Bank (EIB)
construction and the acquisition of new rolling stock.
ROMANIA • October 2010
4
SUBMARKETS
PROPERTY NEWS
BUCHAREST, THE CAPITAL CITY, is the most developed office market in Romania, attracting the major-
Delivered projects in 2010 in Bucharest
ity of investors. Although the submarkets are not yet
Size (sq m)
Location
Delivery
generally defined, Bucharest has a main submarket
Lakeview
24,000
Centre North
2010
and several secondary ones. The main submarket,
Nusco Tower
20,000
Centre North
2010
Central Business District, is situated in the central-
EuroTower
16,500
Centre North
2010
north part of the city (Victoriei Sq. – Charles de Gaulle
Castrum
Business Center
11,800
CBD
2010
Victoria
Business Center
8,400
CBD
2010
Phoenix Building
8,000
CBD
2010
Sq.); secondary markets are in downtown – central
area, Pipera and North part of the city. Other large cities outside Bucharest have well-known submarkets:
Brasov (Centrul Civic), Timisoara (Cetate), Iasi (Central area) and Mamaia Blvd. - Constanta.
Office
Market
During 2010 the office market has continued to be characterized by imbalance
between demand and supply levels. The
transactions volume significantly decreased by more than 50% compared to
the same period in 2007-2008. However
compared with 2009, the trend has start-
Other office markets are in constant developing in
THE VACANCY RATE has reached an all-time high
cities with large number of inhabitants, reflecting the
at ~20% of the total supply. This is mainly due to
improvements of the local economy. A good example
the new deliveries on the market, in 2009 and
is Cluj-Napoca which does not have a clear and de-
2010, which have vacancy close to 50% or even
fined offices area for the moment, but the strong pres-
higher for developments situated outside the CBD
ence and relocation of multinational companies in this
at inauguration date. The total stock of modern of-
city leads to further development of this segment.
fice space in Bucharest is currently close to 2 mil-
The secondary office markets are represented
lion sq m.
by cities such as: Bacau, Craiova, Galati, Pitesti and
Numerous developers have announced post-
Ploiesti, their evolution depending on national and
poning construction of office buildings in various
regional economy, as well as the exports’ trend.
locations in Bucharest, such as Anchor Downtown,
Class B dominates the supply market in these cit-
Orhideea Towers, Neocity Building Centre, Avrig 7,
ies; the main demand is coming from large compa-
Dorobanti 81-85 or Sky Tower. Even so there are
ed to stabilize. The new delivered projects
nies in search for back-office spaces, for outsourc-
recent announcements of further developments
and the high supply levels caused down-
ing services and for mixed developments, namely
from the part of investors willing to capitalize on
ward pressures in rental levels (and in-
office and light industrial & logistics. Compared to
the future lack of new delivery anticipated on 18
creased vacancy rates. Since the begin-
Bucharest, main office markets are offering lower
months period. Atenor Group, a Belgium compa-
ning of 2010 around 150,000 sq m of new
rental levels (15–20%) and maintenance fees (15-
ny, announced an investment of 150 million Euro
office spaces were delivered.
25%), as well as parking places at lower costs.
for the construction of 70,000 sq m office spaces
Today’s tenants and potential clients are
There are very few developments which rise to the
– Hermes Business Campus in Pipera area (1st
strongly renegotiating office spaces. The
level of quality and technical standards required for
phase – 35,000 sq m, due for completion in the
limited leasing activity (including pre-
the claimed level.
first half of 2012).
leases) was reflected in vacancy rate increase as compared to previous years.
On short-medium term period, based on
the existing conditions of the economy
and the real estate market, yields are
expected to increase, while the number
of investment transactions will remain at
a low level.
The vacancy rate will be maintained at
high levels due to the delivery of new
buildings and tenant’s budget reductions,
personnel resize and insolvencies.
ROMANIA • October 2010
5
Office Market
PROJECTS UNDER
CONSTRUCTION
THE OFFICE LEASING transactions targeted mostly
Main Pipeline Office Projects in Bucharest
surfaces up to 1,000 sq m. Since the beginning of 2009,
Property
larger office leasing were focused on Bucharest market with few transactions outside the capital city: Inte-
Rentable area (sq m)
Location
Delivery
Petrom City
65,000
North
Q3/Q4 - 2010
Global City – phase 1
45,000
North
Q4 - 2010
sa SanPaolo – 9,500 sq m in Brasov Business Park in
Platinum Business Convention Center
37,000
North
Q4 - 2010
Brasov, Wipro Technologies Romania – 4,500 sq m in
Swan Office Park – phase 1
23,000
North
Q4 - 2010
City Business Center from Timisoara, ING Life Insur-
Crystal Tower
18,000
CBD
Q4 - 2010
ances – 4,000 sq m in Amera Tower from Cluj-Napoca,
West Gate Park
15,000
West
Q4 - 2010
Amazon.com – 1,400 sq m in Palas Offices in Iasi.
Sun Offices
10,000
South
Q4 - 2010
8,800
Center North
Q4 - 2010
Polona 68
DEMAND - SUPPLY
CONCERNING THE MOST sought-after regions
with office space, Bucharest remains the leading
one, counting for 25% of the total number of Romanian office space. Demand experienced substantial
changes due to the decrease of tenants looking for
relocation options, in order to achieve cost savings.
The main tenants’ option remains the rents re-
Main office leasing transaction in Bucharest in 2010
Tenant
Size (sq m)
Building
Location
Unicredit Bank (pre-leased)
15,000
Unicredit Business Centre
North
Sanador
11,800
Castrum Business Center
CBD
Rompetrol
9,300
City Gate
North
negotiations for the currently occupied spaces.
Raiffeisen (contract extension)
8,000
Charles de Gaulle Plaza
CBD
The tenants hope to achieve better lease terms as
Oracle (contract extension)
7,200
Oracle Tower
Centre North
a consequence of the higher vacancy, even before
Oracle
7,000
Nusco Tower
Centre North
the lease contracts expiration. Pre-leases are very
Price Waterhouse Coopers
7,000
Lakeview
Centre North
few due to the high availability among already ex-
Transelectrica
6,700
Platinum Center
Center
isting office building. However, there are important
Garanti Bank
4,300
Novo Park F
North
companies, like Unicredit Bank in need of landmark
Lidl
2,900
Pipera Business Tower
North
buildings. In order to optimize the costs, some
GfK
2,700
BOC – Upground phase II
North
companies prefer to sub-lease part of the occupied
BDO
2,700
Victory BC
Centre
space, usually with an area below 1,000 sq m.
Although premises located in secondary submarkets provide high standards and more substantial discounts compared to CBD, tenants are
not willing to rent areas in these premises due to
limited infrastructure and transport facilities. The
supply levels in 2010-2011 will be negatively influenced by postponements or by cancellations of
new office developments. Under the current market conditions, the negotiation process has been
extended, as a consequence of tenants trying to
obtain better conditions combined with landlords’
reluctance in lowering the rents too much.
The high vacancy rate is concentrated in secondary submarkets, especially in Pipera-Tunari
region, some buildings reaching as high as 50%,
while in CBD it is under 10%, not accounting for Bucharest Tower International – which is still vacant
due to the legal constraints.
ROMANIA • October 2010
6
Office Market
PRICE – RENTS – YIELDS
DURING H1 2010 the rent levels showed a downward pressure, mainly due to the renegotiations of
existing lease contracts.
Yields variation
Bucharest Office Market
12%
Asking rental levels decreased 10%-15% concerning all types of office buildings and in all areas
Secondary market
8%
of the city. Higher decrease was recorded in secondary submarkets. The landlords also offer addi-
Prime market
4%
tional incentives resulting in base rents decrease
by further 10%-15% and the net effective rents by
0%
2007
2008
2009
2010
2011f
20%-25%. Although the new office spaces have
lower rent levels, relatively high relocation costs
are forcing most companies to look for a contract
extension in the same space at a lower rent or diminish the areas they occupy.
TRENDS - FORECASTS
Rents on the prime submarket – Bucharest’s
Under the existing conditions of the economy and
CBD ranged between €17- €18/sq m. In second-
with a limited number of transactions we estimate
WITH THE ESTIMATED new supply under devel-
ary locations of Bucharest the rental price levels
that the yields for prime locations of the main sub-
opment, it is expected that, further downward
range between €10 and €12/sqm. Other prime cit-
market vary at a level of 9-10%, while for yields in
pressure will be exerted on rents. Due to the low
ies have a rent level variation between €7 and €12/
secondary submarkets the estimation is of 10-11%.
demand, renegotiations concerning lease con-
sqm. In secondary submarkets the average rental
tracts are expected to be constant. Sub-leasing the
Yields variation
extra space is an uprising trend that will continue,
price levels range is €5-€10/sq.m.
City
Prime rent Trend
(Euro/sq m) 12M
Bucharest – CBD
17 - 18
Bucharest – secondary market
10 - 12
Brasov
7-9
Timisoara
8 - 12
Constanta
8 - 12
Cluj-Napoca
8 - 12
Bacau
5-10
Craiova
5-10
Galati
5-10
Pitesti
5-10
Ploiesti
5-10
➘
➘
➘
➘
➘
➘
➘
➘
➘
➘
➘
Year
Prime market
Secondary market
2007
6.00%
7.50%
2008
6.25%
8.00%
2009
7.00%
9.00%
2010
9.00%
10.50%
2011f
9.00%
11.00%
as companies search to optimize costs.
The new search criteria in selecting the ideal space
to rent include less flexibility towards transportation
options (a special requirement is - direct access to subway station), desirable location, visibility and optimal
space partitioning, from the part of potential tenants.
ROMANIA • October 2010
7
STREET RETAIL
The street retail rental level was seriously affected
HIGH STREET RETAIL is concentrated in the down-
by some of the local companies’ bankruptcy. Conse-
town of Bucharest and main cities, along the ma-
quently spaces placed on the major shopping areas
jor boulevards, with good pedestrian traffic. Each
suffered a downgrade of 20-50% from the 2007-2008
case exhibits particular retail features, although
level and with about 10% compared to 2009.
all feature major concentration of international
SHOPPING MALLS
and local multiple chain retailers.
Retail
Market
For Bucharest, the main street retail area is
MOST OF THE SHOPPING centers, even the most
alongside Victoriei St. that gathers luxurious inter-
prolific ones, have focused their full attention for
national brands. Street retail in other main cities in
keeping the already existing clients and tried to
Romania can be found on central boulevards like
support them with specific advantages in order to
Stefan cel Mare Blvd. in Constanta, Piata Unirii in
balance the encountered business difficulties as
Timisoara, Republicii in Brasov, St. Mihail Cathedral
a measure of support during times of crisis. New
Area in Cluj Napoca, Anastasie Panu Blvd. – Iasi.
tenants receive tailor-made offers from the land-
The high street retail zone is yet to reach the size
and value of other central European capitals. Although
lords, regarding the duration of the contract and
the financial terms.
In the summer of 2010, the total stock reached 2.2
some luxury fashion brands are present, most high
million sq m, counting also the opening in the last
street retail spaces are occupied by services.
In 2007-2008 the high street retail was mainly driv-
12 months, with a total selling area of 300,000 sq m.
en by expansion of banks and pharmacy branches.
The most recently opening is Cocor Luxury Store
However, in the last 12 months those retailers have
(10,000 sq m of selling area) and no major schemes
the largest shopping mall to date was
stopped expanding and entered in a new phase of
are expected to be delivered in the short run, as
opened in Romania – AFI Palace Co-
business efficiency adjustment which ends up either
most of the schemes have been put on-hold.
troceni. In spring 2010, AFI Cotroceni
by a renegotiated rent or by business closures.
The retail stock has risen considerably
since fall 2009. Before Christmas 2009
Moreover, the first closings of modern retail park
was surpassed by Sun Plaza, located in
Due to the new deliveries on the shopping malls
have been registered by the owners of Armonia
the south part of Bucharest, in terms of
sector, the high street retail has suffered from a
Braila and Trident Sibiu (opened in the booming
leaseble area.
further decrease of demand. High street retail has
2008), while Tiago Mall Oradea has postponed the
to overcome this competition by lowering the rent
opening date, changed ownership that is trying to
level, full refurbishment of spaces, correct dimen-
reposition the project. At the same time the an-
sioning of areas. Potential final buyers prefer the
nouncements for future schemes are few. In fact,
new compact modern retail areas such as galler-
active construction works are in progress only at
ies or shopping malls.
Gold Plaza in Baia Mare, due to be open in Q4 2010.
In total more than 300,000 sq m of leaseble area in shopping malls were delivered
in the market during the last 12 months.
At same time, due to the economic crisis
internal consumption dropped drastically
from the highs recorded in 2007 and 2008,
when most of the retail scheme started
to be developed.
The beginning of 2010 was characterized
by a fast increasing vacancy rate and also
by an avalanche of rent renegotiations
especially from the part of medium size
local retailers. Apparently the reluctance
Key existing Shopping Malls in Romania (openings H2 2009 – H1 2010)
Project name
Location/city
Sun Plaza
AFI Palace Cotroceni
Grand Arena
Iulius Mall (extension)
Atrium Center
Galleria Piatra Neamt
Cocor Luxury Store (refurbished)
Galleria Suceava
Bucharest
Bucharest
Bucharest
Timisoara
Arad
Piatra Neamt
Bucharest
Suceava
of the companies to expand in new shop-
Major Retail Projects Pipeline in Romania
ping areas combined with the decrease
retail projects, which opened in 2009-
Project name
Polus Centre
Galleria Arad
Gold Plaza
2010, not yet being rented.
Severin Shopping Centre
of consumption has resulted in several
Rentable Area (sq m)
80,000
76,000
50,000
30,000
30,000
10,500
10,000
9,000
Opening Year
2010
2009
2009
2010
2010
2010
2010
2010
Location
Constanta
Arad
Baia Mare
Surface (sq m)
48,000
33,000
30,000
Developer
Immofinanz
GTC
Futureal / Immofinanz
Drobeta Turnu Severin
20,000
BelRom
ROMANIA • October 2010
8
Retail Market
BIG BOX – OUTLET –
HYPERMARKETS
Key Big Box developments in Romania (openings H2 2009 - H1 2010)
THE FIRST RETAILERS, that have a presence since
Arad
Brasov
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Craiova
Drobeta Turnu Severin
Drobeta Turnu Severin
Iasi
Iasi
Iasi
Pitesti
Ploiesti
Ploiesti
Ploiesti
Satu Mare
Sibiu
Timisoara
Timisoara
Timisoara
early 2000, have now started to look at smaller
cities, with less than 50,000 inhabitants. Carrefour has started with a chain of hypermarkets in
large cities and in the last year is more interested
in smaller developments, like supermarkets, in
order to cover the segment of smaller cities or to
place the retail schemes closer to urban concentration.
Developers of big box projects are now considering smaller shopping galleries in order to open
on announced date under the current market conditions. The most affected are fashion retailers.
Size
Main retailers
over 10,000 sq m
Carrefour, Cora, Auchan, Real,
Hornbach, Leroy Merlin, IKEA,
kika
over 5,000 sq m
Metro Cash & Carry, Selgros
Cash & Carry, Kaufland,
Bricostore, Praktiker, Mr
Bricolage, Baumax, OBI,
Dedeman, Mobexpert,
over 3,000 sq m
Media Galaxy, P&C Dusseldorf,
Debenhams, Flanco World
over 2,000 sq m
Domo Land, Zara, Billa
Supermarket, G’Market, Penny
Market XXL
500-2,000 sq m
Carrefour Express, Carrefour
Market, Metro Punct, Marks &
Spencer, Esprit, House Of Art,
Diverta, Neoset, Rovere Mobili,
Plus, Penny Market, Hervis,
Deichmann, Humanic, Profi,
Mega Image
Location/city
Type of retail
(Big-Box, outlet, hypermarket)
Dedeman
Dedeman
Cora Sun Plaza
Dedeman Militari
Real Pallady
Mobexpert Sun Plaza
OBI Pallady
Metro Pallady
Selgros Militari
Carrefour Arena
Baumax Sun Plaza
Real Cotroceni
Dedeman
Carrefour
Bricostore
Baumax
Dedeman
Mr. Bricolage
Baumax
Baumax
OBI
Real
Metro
OBI
Dedeman
Baumax
Real Est
Surface
(sq m)
10,000
14,000
12,000
10,000
10,000
10,000
8,500
8,300
8,000
8,000
8,000
7,500
10,000
7,500
7,000
10,000
10,000
10,000
10,000
10,000
8,500
8,000
6000
8,400
14,500
12,000
7,500
Opening
Year
2010
2010
2010
2009
2010
2010
2010
2010
2009
2009
2010
2009
2010
2010
2010
2009
2009
2010
2010
2009
2010
2009
2010
2010
2010
2010
2009
ROMANIA • October 2010
9
Retail Market
Big Box projects Pipeline
Retailer
Cora Galleria
Cora Gold
Dedeman
Auchan Coresi
Auchan Pallady
Hornbach Corbeanca
Carrefour Colosseum
Baumax
Leroy Merlin
Auchan Polus
Baumax
Cora City Park
Auchan
Auchan Palas
Baumax
DEMAND - SUPPLY
Location
Arad
Baia Mare
Brasov
Brasov
Bucharest
Bucharest
Bucharest
Bucharest
Bucharest
Constanta
Constanta
Constanta
Craiova
Iasi
Pitesti
PRICE – RENTS-YIELDS
Main retail
Secondary
street
retail locations
FOR THE MOMENT, the overall retail demand is low,
due to the political and fiscal instability. Because of
the decreasing level for the land selling price, the
Surface (sq m)
9,000
8,000
17,700
10,500
20,000
20,000
16,000
15,000
15,000
12,000
10,000
5,000
10,000
5,000
15,000
Bucharest
€ 50 – 65
€ 25 – 40
Malls
Hypermarkets
DIY
Furniture
€ 40 – 70
€8-9
€ 10.00
€ 10.00
€ 7.00
Cluj-Napoca
€ 25 - 35
€ 15 - 25
€ 20 – 25
€7-8
€ 7.00
Iasi
€ 20 - 25
€ 10 - 20
€ 20 – 25
€7-8
€ 7.00
€ 7.00
and Penny Market, are the most expensive retail-
Timisoara
€ 25 - 30
€ 15 - 20
€ 20 – 25
€7-8
€ 7.00
€ 7.00
ers. At the same time the hypermarket operators
Constanta
€ 25 - 30
€ 10 - 20
€ 20 – 25
€7-8
€ 7.00
€ 7.00
have limit their expansion plans, especially as a re-
Brasov
€ 20 - 30
€ 10 - 20
€ 20 – 25
€7-8
€ 7.00
€ 7.00
international discount networks, like Kaufland, Lidl
sult of many delays in opening the shopping malls,
in which they were the anchor tenants.
THE HIGH-STREET RETAIL units have continued to
ties with maintaining a constant income stream.
The biggest decrease in terms of demand for re-
lower the rental levels, almost with 50% yoy, depend-
The selling price for high-street retail units has
tail spaces is registered by the fashion and home
ing on location. The only notable exception is the his-
dropped with more than 35% in prime location and
appliances & electronics store operators. This sit-
torical part of Bucharest, where infrastructure and
even higher in secondary ones since 2008. This is a
uation is caused by the lack of purchasing power
the open-air character add to the increased rent.
consequence of the scarcity of transaction and low de-
of the middle class, those sectors being the first to
The rent in the commercial centre shows a de-
mand. The situation is worsened by the lack of demand
suffer from the current economic situation, while
creasing curve, especially in the projects with high
for renting the retail spaces due to the reorientation of
the food distributors are less affected to date.
vacancy rates. The landlords are willing to negoti-
retailers towards shopping centre and so the future
ate even older contracts since tenants face difficul-
cash-flow for a potential investor is jeopardized.
There are some new fashion international operators looking to enter the Romanian market,
such as H&M, which announced leasing contracts
for surfaces in two shopping malls in Bucharest.
In the historic part of capital city, the demand for
coffee shops and bars is still high mainly due to
the attractiveness of the area.
The demand/supply ratio exhibits a steep decrease in comparison with the same period last
year. It is estimated that overall there is a vacancy
of up to 15%; however the success of each project
differs. There are some new opened schemes like
AFI Palace Cotroceni, where the vacancy rate is under 5%, while in areas with many developments,
like south Bucharest, Grand Arena has vacancy of
almost 25%.
ROMANIA • October 2010 10
Retail Market
Yields on prime and secondary markets
Main retail
Secondary
street
retail locations
Bucharest
Cluj-Napoca
Iasi
Malls
Hypermarkets
DIY
Furniture
8-9%
9-10%
6-8%
7-8%
9%
9%
9-10%
10-12%
8-9%
8-9%
9-10%
9-10%
10-11%
10-12%
9-10%
8.5-9.5%
9-11%
9-11%
Timisoara
9-10%
10-12%
8-9%
8-9%
9-10%
9-10%
Constanta
9-10%
10-12%
7-9%
8-9%
9-10%
9-10%
tion stage, most of the developers have put the
TRENDS - FORECASTS
projects on hold until the demand will start to re-
OVER THE NEXT 18 MONTHS the new developments
verse the downward trend.
will be hampered by financial issues and lack of po-
Only the discounter networks, such as Lidl
tential tenants. Older developments will try to repo-
which is planning to enter the market in 2011 with
sition as discount shopping facilities or otherwise,
10-15 simultaneous store openings, are going to
such as Tiago Mall Oradea or Armonia Braila, possi-
actively search new locations on the market. How-
ble even Grand Arena and City Mall, which also suffer
ever most of them prefer to build own-locations,
from the decrease in pedestrian traffic.
resulting in a reduce impact on the overall retail
Few shopping malls are still in active construc-
market situation.
ROMANIA • October 2010 11
SUBMARKETS
medium-sized areas, usually up to 5,000 sq m.
THE PRIME MARKET of new logistic areas is
Most transactions were taken place in western
placed in Western part of Bucharest on A1 High-
part of Bucharest, like Antalis and Ausburg, each
way and the secondary markets are in Constanta
with a take-up of ~10,000 sq m, or Saint Gobain
on North-West Ring Road, Brasov North-West exit
with more than 3,000 sq m. Golden Foods settled
towards Ghimbav and Cristian, Timisoara Airport,
for the eastern part of the city renting 6,000 sq m
South and West areas of Cluj-Napoca and West
in Millenium Logistic Park. The largest transac-
part of Ploiesti.
tion outside Bucharest was in Timisoara, where
In 2010 we expect few completions; however,
Moretti has rented 5,000 sq m.
it is estimated that in the next years more of the
Logistics
Market
After suffering the initial shock of demand
decrease, the logistic market showed
signs of stabilization due to the relative
balance between supply and demand.
Because the logistic and light industrial
was the last sector of real estate in Romania capitalizing on the market booming years - starting only in late 2007 to
offer large developments speculatively
built - it has a rather small overall value,
compared to other East-European Coun-
announced new logistics park will be delivered on
DEMAND - SUPPLY
the market. Bucharest has about 60% of all mod-
AS A RESULT OF RECENT pre-lease contract some
ern logistic space in Romania, while all the other
developers have started constructing built-to-suit
submarkets are totaling just 40%, showing the im-
warehouses. Few developers are continuing the
balance of the first phase of development which
speculative logistic centers. Following increase of
concentrates around the capital city.
demand at the initial stage of 2010, currently it is
noticed stability, yet still low demand.
PROPERTY NEWS
During 2009, about 100,000 sq m were leased,
ONE OF THE MOST important developers, Portland
most of them in the second half of the year. This
Trust has announced that in 2011 will eventually
represents only about 50% of the volume recorded
start construction on a project situated on 200ha
in the previous year. The majority of the new sup-
of land. The project has been previous delayed for
ply was in fact extension of older projects.
about 2 years due to the market conditions and issues related to permits.
Active demand comes from supermarket &
discounter operators, electronic components and
In the first half of 2010 the light industrial & logis-
food suppliers. In an attempt to reduce costs, ten-
tics segment was marked by the slight increase of
ants renegotiate the rents, reduce occupied space
the leasing activity. The majority of requests were
or relocate in cheaper premises. The vacancy rate
for medium-sized space. Except the built-to-suit
increased settling ~ 15% in Bucharest area, slightly
premises, the available supply consist in small and
higher in other major logistics hub outside capital.
tries as well as with Romania’s potential.
After an important decrease in 2009, the
first half of the current year has been a
more balanced one showing a slight improvement on the market.
The biggest advantage of Romania – acting as a hub between Asian exports and
European imports by Constanta Harbor
and Danube connection - is yet to be
fully utilized by the logistic developers.
This is also an effect of the poor state of
infrastructure on all levels. When some
of the current projects of infrastructure
improvements will be completed, like
A2 Highway to Constanta and modern
harbor installations, the developments
of new specialized storage areas will be
encouraged.
ROMANIA • October 2010 12
Logistics Market
PRICE – RENTS – YIELDS
Location
Rent level
Euro/sq m
€4.00 - 4.50
€4.00 – 4.50
€3.75 - 4.00
€3.75 - 4.00
€3.50 – 4.00
Sale price for
industrial land
Euro/sq m
30-60€
25-40€
20-40€
25-50€
20-35€
between 4 and 4.5 Euro/sq m (service charges
Bucharest
Constanta
Brasov
Timisoara
Cluj
10%
10 – 11%
10 – 12%
10 – 12%
10 – 12%
excluded), while for secondary submarkets the
Ploiesti
€3.50 – 4.00
20-40€
10 – 12%
AFTER AN INITIAL downward trend during 2009,
the rents were stable during 2010, especially due
to the relative balance between demand and supply. Monthly rental levels for main locations are
Yield %
levels are below 4 Euro/sq m. Some developers
are offering rent free period or fit-out deductions
for long contracts, effectively decreasing the rent
with up to 10%.
Selling prices are with 20-30% higher than the
construction price, sensible lower than 2009, partially as a consequence of lower cost for construc-
MAP OF ROMANIA
tion materials. The yields are ranging between 10
and 12% and are currently on a stable trend.
TRENDS – FORECASTS
*"ę*
ALTHOUGH THE MAIN LOGISTICS hub will remain
$-6+/"10$"
in western part of Bucharest, it is evident that in
#"$ć6
the near future, developers will also be attracted to
less explored areas till now, featuring good potential as a consequence of expected infrastructure
investment. Such areas are: Constanta SouthAgigea, Sibiu North-West, Iasi West and Craiova
#3"ę07
5*.*ę0"3"
East.
It is highly likely that the vacancy rate will not
increase due to the orientation of the market to-
1-0*&ę5*
1*5&ę5*
wards built-to-suit warehouses and less speculative investments.
("-"5*
BUCHAREST
$0/45"/5"
$3"*07"
ROMANIA • October 2010 13
Contact Information
>
me
nt
ke
tR
A
te
est
ar
sta
Inv
M
lE
>
a
Re
>
es
is
dv
ea
rc
n
a
>A
g
h
ppra
isals emen
t
> Broker
age
gement
a
n
a
M
s
e
i
t
i
l
i
ty & Fac
e ent
t
> Proper
a
t
l Es gem
a
e
eR
na
t
a
a
r
M
rpo
o
et
C
s
>
As
e
tat
s
lE
a
e
R
>
TOT
A
T
A
L REAL EST
LU
T
>
Te
c
hn
ica
lS
er
vic
ION
S
es
y
or
Ma
O
S
E
EFG Eurobank Property Services S.A.
6A Dimitrie Pompeiu Blvd, Olympus House, Fifth Floor, Bucharest, District 2, Romania, tel.: + 40 21 308 6100
Disclaimer
This report has been issued for advertising purposes by EFG Eurobank Property Services S.A., a member of the EFG Group, and may not be reproduced in any manner or provided to any other
person. Each person that receives a copy by acceptance thereof represents and agrees that it will not distribute or provide it to any other person. This report is not an offer to buy or sell or a
solicitation of an offer to buy or sell the real estate mentioned herein. EFG Eurobank Property Services S.A. and others associated with it may have positions in, and may effect transactions in
the real estate mentioned herein, and may also provide or seek to provide services (investment banking, brokerage or other) for those companies. The investments discussed in this report
may be unsuitable for investors, depending on the specific investment objectives and financial situation. The information contained herein has been obtained from sources believed to be
reliable but it has not been verified by EFG Eurobank Property Services S.A. The opinions expressed herein may not necessarily coincide with those of any member of the EFG Group. No
representation or warranty (express or implied) is made as to the accuracy, completeness, correctness, timeliness or fairness of the information or opinions herein, all of which are subject
to change without notice. No responsibility or liability, whatsoever and howsoever arising is accepted in relation to the contents hereof by EFG Eurobank Property Services S.A. or any of its
directors, officers or employees. This is an advertising report and is distributed free of charge.
ROMANIA • October 2010 14