Property Times, Romania Q1 2010 - Investment

by DTZ Echinox

Investment activity for the 1st quarter 2010 reached a volume of a��91 million, dominated by retail activity. We believe that the activity has been fuelled by the increasing pressure on sellers to find an agreement with potential buyers. Activity has mainly been by investors who are already present in Romania and have used the downturn in the market to expand their portfolios.

The volume of Q1 2010 dwarfs that of the same time in 2009, however it must be noted that the first 3 months of 2009 saw the investment market practically coming to a standstill. The change quarter on quarter was 45%.

The retail sector was at the forefront of activity with an 83% share of total transactions. This confirms a number of important factors about this sector from the investora��s point of view, namely that although retail has arguably suffered the most of all the commercial sectors, it remains with a large potential for the future as the economy and property markets return to strength. This is mainly supported by the relative undeveloped nature of consumer spending in Romania. Examples of this being the undeveloped market for consumer credit for retail goods, low wages compared to the rest of Europe and the high rates of un-leveraged owner-occupation in the housing market (meaning few consumers have mortgage obligations each month).

The transaction list (Table 11) shows that most deals remain to be of small or medium lot sizes, reflected by the profile of the most active buyers which is that of private investors (individuals). New Europe Property Investment (NEPI) has been the most active institutional investor over the past 12 months, focussed on predominantly retail assets.

According to DTZ analysis in the first quarter of 2010 prime office, retail and industrial yields remained stable at 9% (office), 9.5% (retail) and 11% (industrial).