Post by superman on Nov 1, 2007 10:30:49 GMT -5
Romania - The New Real Estate Paradise?
Tuesday, 08 May 2007
Romania's accession to the European Union, high demand, the development of business sectors and increased consumption place Romania in the centre of foreign real estate investments.
Recently considered a market in transition, the country with the largest population in Eastern Europe is now a sure target for big investment funds that aim for large return.
The active presence of investors such as Europolis, Apollo, Heitmann, Immoest, Meinl European Land,
TriGranit Development Corporation and Autoker Holdingis an additional argument that Romania has every chance to equal, or even exceed, the real estate boom in neighbouring countries. A short overview of the companies that have announced their firm intention to invest in Romania guarantees a flux of at
least two billion euros on the real estate market in the next three to four years. The most promising sectors, regarding profitability, are office, logistics and retail spaces.
High level of amortization
Studies show that Romania's main advantage compared to neighbouring countries is connected to the return on investment (estimated at 10-12 percent) and economic stability optimum ratio. Practically, in comparison to Poland, Hungary or the Czech Republic, which have been deemed the new gold mines of the real estate market, in Romania the rate of amortization on real estate investments is two to three percent higher.
According to DTZ Echinox, the investor that now enters the Romanian real estate market can obtain in the following years a 15 to 20 percent higher gross profit than that obtainable in neighbouring countries.
Commercial market
Market analysts estimate that the lease tariffs for commercial spaces could go up by as much as 10 to 15 percent before the end of this year, with the highest demand placed in Bucharest's less central areas,
where monthly rents have already exceeded 10 euros/sqm. The rent for commercial spaces in downtown areas has reached rather high levels. The shops on commercial arteries such as Magheru, Balcescu, Bratianu and Calea Victoriei are rented out for 130 euros/sqm. Assessments by Colliers International consultants show rents between 50 and 130 euros/sqm in downtown areas, while rents in neighbouring
areas have reached 20 to 70 euros/sqm. Spaces placed on the outskirts of the capital start from 10 euros/sqm and reach 25 euros, depending on the facilities.
Retail projects developed in the exclusive areas of Bucharest have an efficiency of 8 to 11 percent. If the investment's location is outside Bucharest, efficiency can reach 16 percent. At the end of last year, the sale spaces inside commercial centres reached 270,000 sqm.
Office market
According to CB Richard Ellis analysts, the return of the investments in Class A office spaces has decreased from 12 percent to 8.5 percent in 2005, a trend likely to remain the same in 2006. Even so, this sector continues to be extremely profitable for foreign investors, as the return in the region is even lower. Nevertheless, this trend has not been observed in Sofia, Istanbul and Moscow, as they have registered returns around 10 percent. At the other end of the spectrum are Warsaw with a return of 6.5 percent, Prague 6.75 percent, and Budapest 7 percent. The high return registered in 2005 has led to an increase in the total office spaces by about 35 percent, totalling 820,000 sqm. The occupancy of Class A office spaces is 80-90 percent. The average lease price in this sector is 18-20 euros/sqm, while the average rent for Class B spaces is 16-17 euros/sqm. In 2006, about 200,000 sqm of new, high-quality offices will be developed in Bucharest, while more than 40,000 sqm of office space will be renovated. The average leasing term for space in Class A and Class B office buildings will be 3-5 years, and 2-3 years for reconditioned buildings. The high demand is also explained by the fact that more than half of the new Class A office spaces that are currently under construction have already been leased.
Industrial market
2005 marked the start of a coming-of-age for the industrial sector. The current available space of 160,000 sqm (of which 60,000-80,000 sqm were developed last year, the greatest addition in the past 15 years) is not sufficient taking into account the rapid pace of development of retail and logistics companies. The new projects, launched at the end of 2005 or at the beginning of 2006, will add at least 230,000 sqm to the current space, out of which 130,000 sqm will be available by yearend. The occupancy rate of the industrial spaces exceeds 95 percent, while the new, high-quality spaces are immediately absorbed. Real estate experts foresee that the lease prices for industrial units will decrease from 5 - 5.5 euros/sqm to 4 - 4.8 euros/sqm,
depending on the facilities or the lease period. The average surface area of the industrial units sold last year was about 3,500 sqm. The locations preferred by developers of logistics parks are those in the accessible areas of Bucharest and those nearby main roads. Currently, Cefin Logistic Park is the largest project
in this sector as well as the first project to have been purchased by a foreign investment fund.
To view Property for Sale in Romania click www.therightmoveabroad.com/pro_serach.php?class_id=51"
The Right Move Abroad - www.therightmoveabroad.com
Tuesday, 08 May 2007
Romania's accession to the European Union, high demand, the development of business sectors and increased consumption place Romania in the centre of foreign real estate investments.
Recently considered a market in transition, the country with the largest population in Eastern Europe is now a sure target for big investment funds that aim for large return.
The active presence of investors such as Europolis, Apollo, Heitmann, Immoest, Meinl European Land,
TriGranit Development Corporation and Autoker Holdingis an additional argument that Romania has every chance to equal, or even exceed, the real estate boom in neighbouring countries. A short overview of the companies that have announced their firm intention to invest in Romania guarantees a flux of at
least two billion euros on the real estate market in the next three to four years. The most promising sectors, regarding profitability, are office, logistics and retail spaces.
High level of amortization
Studies show that Romania's main advantage compared to neighbouring countries is connected to the return on investment (estimated at 10-12 percent) and economic stability optimum ratio. Practically, in comparison to Poland, Hungary or the Czech Republic, which have been deemed the new gold mines of the real estate market, in Romania the rate of amortization on real estate investments is two to three percent higher.
According to DTZ Echinox, the investor that now enters the Romanian real estate market can obtain in the following years a 15 to 20 percent higher gross profit than that obtainable in neighbouring countries.
Commercial market
Market analysts estimate that the lease tariffs for commercial spaces could go up by as much as 10 to 15 percent before the end of this year, with the highest demand placed in Bucharest's less central areas,
where monthly rents have already exceeded 10 euros/sqm. The rent for commercial spaces in downtown areas has reached rather high levels. The shops on commercial arteries such as Magheru, Balcescu, Bratianu and Calea Victoriei are rented out for 130 euros/sqm. Assessments by Colliers International consultants show rents between 50 and 130 euros/sqm in downtown areas, while rents in neighbouring
areas have reached 20 to 70 euros/sqm. Spaces placed on the outskirts of the capital start from 10 euros/sqm and reach 25 euros, depending on the facilities.
Retail projects developed in the exclusive areas of Bucharest have an efficiency of 8 to 11 percent. If the investment's location is outside Bucharest, efficiency can reach 16 percent. At the end of last year, the sale spaces inside commercial centres reached 270,000 sqm.
Office market
According to CB Richard Ellis analysts, the return of the investments in Class A office spaces has decreased from 12 percent to 8.5 percent in 2005, a trend likely to remain the same in 2006. Even so, this sector continues to be extremely profitable for foreign investors, as the return in the region is even lower. Nevertheless, this trend has not been observed in Sofia, Istanbul and Moscow, as they have registered returns around 10 percent. At the other end of the spectrum are Warsaw with a return of 6.5 percent, Prague 6.75 percent, and Budapest 7 percent. The high return registered in 2005 has led to an increase in the total office spaces by about 35 percent, totalling 820,000 sqm. The occupancy of Class A office spaces is 80-90 percent. The average lease price in this sector is 18-20 euros/sqm, while the average rent for Class B spaces is 16-17 euros/sqm. In 2006, about 200,000 sqm of new, high-quality offices will be developed in Bucharest, while more than 40,000 sqm of office space will be renovated. The average leasing term for space in Class A and Class B office buildings will be 3-5 years, and 2-3 years for reconditioned buildings. The high demand is also explained by the fact that more than half of the new Class A office spaces that are currently under construction have already been leased.
Industrial market
2005 marked the start of a coming-of-age for the industrial sector. The current available space of 160,000 sqm (of which 60,000-80,000 sqm were developed last year, the greatest addition in the past 15 years) is not sufficient taking into account the rapid pace of development of retail and logistics companies. The new projects, launched at the end of 2005 or at the beginning of 2006, will add at least 230,000 sqm to the current space, out of which 130,000 sqm will be available by yearend. The occupancy rate of the industrial spaces exceeds 95 percent, while the new, high-quality spaces are immediately absorbed. Real estate experts foresee that the lease prices for industrial units will decrease from 5 - 5.5 euros/sqm to 4 - 4.8 euros/sqm,
depending on the facilities or the lease period. The average surface area of the industrial units sold last year was about 3,500 sqm. The locations preferred by developers of logistics parks are those in the accessible areas of Bucharest and those nearby main roads. Currently, Cefin Logistic Park is the largest project
in this sector as well as the first project to have been purchased by a foreign investment fund.
To view Property for Sale in Romania click www.therightmoveabroad.com/pro_serach.php?class_id=51"
The Right Move Abroad - www.therightmoveabroad.com