Bucharest as the capital is the natural first port of call for foreign investors but Romania’s regional cities also offer opportunities, panelists agreed at Real Asset Media’s CEE Outlook briefing, which took place in Bucharest last week.
‘We strongly believe in the regional cities,’ said Laurentiu Lazar, Managing Partner, Romania, Colliers International. ‘We will see many more transactions this year, and bigger tickets than ever before’.
Romania is more in line with Poland than Hungary, he explained: while Budapest has an extremely dominant position and accounts for 60% of the country’s GDP, Bucharest represents 28%, a similar percentage to Warsaw’s 30%. The capital city’s expansion is therefore not stifling growth and opportunities in the so-called secondary cities.
‘If you look at the numbers to attract investors in the office sector, Iasi has a vacancy rate of less than 1% and Cluj-Napoca of less than 5%, so there is a lot of room to grow,’ said Lazar.
Romania’s regional cities are dynamic and creating new opportunities. ‘I am a fan of Timisoara and Cluj-Napoca,’ said Lavinia Ioniță Rasmussen, Partner, NNDKP. ‘These cities are competing with Bucharest for the first time not just in sophistication but also in the size of the projects. In Timisoara, for example, we are seeing some mixed-use projects with office, retail and residential that are really challenging the capital in terms of what they offer and how attractive they look’.
The urbanisation trend which is increasing population in the capital will also in time benefit regional cities, said Lazar: ‘Timisoara, Iasi and others will see migration from smaller towns and from the countryside, especially if hubs are formed and jobs created. A lot depends on much-needed infrastructure and roads to be built’.
‘I share everyone’s views on the growth potential of Romania’s regional cities, we firmly believe in the opportunities they present but for us as a value-add, even opportunistic investor, it is all about pricing,’ said Dimitris Raptis, Deputy CEO and CIO, Globalworth. ‘So at the moment if I had to choose between 7% in Krakow or 8% in Cluj-Napoca I would opt for Krakow because it has a population of 1 million so the size, dynamics and liquidity of the market are very different’.
Liquidity is an issue, said Sergey Koynov, Director Investment & Asset Management, Lion’s Head Investments: ‘Romania’s secondary cities are very active, they have good universities, excellent buildings and a lot of potential, but the markets are not liquid yet so newcomers will focus on Bucharest first and only look for other opportunities at a later stage’.
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