July 15 (SeeNews) - Property investment volume in Romania rose 80% on the year to 340 million euro ($377 million) in the first half of the year, property and investment management services provider Jones Lang LaSalle (JLL) said on Friday.
Prospects for 2016 are positive given the projected economic growth of the country, one of the highest in Europe, JLL said in its half year report.
Bucharest accounted for close to 48% of the total property investment volume in the country in the first half of the year, while the central city of Sibiu came in second with 29% of the transactions.
According to the report, almost half of the market volumes were dominated by retail transactions, followed by office and industrial deals, which accounted for 38%, 17% respectively.
The largest buyer in the office market in the first quarter of the year was Bucharest-listed real estate investment trust (REIT) New Europe Property Investments [BSE:NEP], which acquired Sibiu Shopping City from the Argo group, for 100 million euro, the JLL report showed. This represents the largest single asset deal outside of Bucharest since the economic crisis, JLL noted.
Also, the most notable office transaction was the consolidation of Polish real estate developer GTC’s position in City Gate through the acquisition of Bluehouse’s 40% stake.
Prime office yields are at 7.5% just 25bps away from retail yields (currently at 7.25%), while prime industrial yields are at 9.00%. Yields have compressed between 25 and 50 bps in the last 12 months, but no significant further compression is expected in the second half of 2016, JLL report showed.
"The macro-economic forecast for Romania looks positive, with GDP growth still holding at healthy 4.2% even following the results of the UK referendum. This should make the country one of Europe’s top performers in 2016," consultant Andrei Drosu said.
Also, given the availability of quality product, especially offices, coming to the market in the next 12 months and the still significant yield spread between Romania on one side and Poland or the Czech Republic on the other, investors should shift their attention to Romania and towards more core product within our market, he added.
Commenting on the pro-Brexit vote on the market, head of capital markets Silvana Badea said that the event should have little short to medium term impact on the Romanian economy, as long as the entire EU economy will not suffer any other unexpected shocks.
However, it is quite true that the Brexit effect might take a few months to settle in before a clear trend will emerge, she added.
($ =0.9001 euro)