Briefing Bucharest: ‘A broader range of investors interested in Romania’

Romania’s real estate market is attracting an increasing number and a greater diversity of investors, delegates heard at Real Asset Media’s CEE Outlook Briefing, which was held in Bucharest last week.

‘There is a real vibe here,’ said Laurentiu Lazar, Managing Partner, Romania, Colliers International. ‘I see newcomers arriving, I see a lot of investors interested in what we have on the market.’

Outlook 2019 CEE panel, Bucharest, February 2019

In addition to South African capital which is still coming in there is ‘an increase in investments from Israel and Austria, both from established players and new entrants to the market,’ said Lavinia Ioniță Rasmussen, Partner, NNDKP. ‘Western European capital is still under-represented, as some investors were looking at Romania but did not manage to transact.’

Private equity is still driving transactions in Romania, but as more assets come to the market institutions’ interest will be sparked. ‘Product availability was a real issue, but now there are core products in the market. There are some mandates, on the seller side we see an aggregation strategy, so it will be interesting to see how investors react to this,’ she said.

‘Romania has a great potential, but there are no Germans yet,’ said David Hay, Partner, ADD Value Management. ‘We don’t see the institutional investors you have in Poland or even Hungary.’

CEE cross-border capital and domestic investors are also playing a bigger role in the market, which is a healthy development, panellists agreed. 

‘CEE capital has been increasing,’ said Lazar. ‘We don’t have the Hungarian REITs here but Czech and Slovak funds have been pretty active.’

Domestic investors have also stuck their heads above the parapet. Last year The Bridge office complex in Bucharest was sold for around 200 mln euros to the local Dedeman Group belonging to the Paval brothers, Romania’s largest employer. 

‘The Bridge was a very interesting development because it was the first time that we have seen a domestic player working towards a core strategy,’ said Rasmussen. 

But ‘the real game-changer would be to have institutional domestic capital in Romania,’ said Dimitris Raptis, Deputy CEO and CIO, Globalworth. ‘Unless there are changes in domestic legislation across the region to encourage pure institutional players and to allow the establishment and development of REITs then we cannot really talk about substantial domestic demand’.

There are legal restrictions in Romania, Rasmussen explained, as local institutions cannot invest in real estate and this makes a noticeable difference compared to the Czech Republic where one-third of investment is done by local institutions.’

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