The land market remained very active in Romania in the first half of 2023, achieving an estimated turnover of approximately 250 million euros, a volume that only includes land transactions for commercial real estate projects in sectors such as residential, office, retail , without segments such as industrial or energy, Colliers shows in the market report on the evolution of the real estate market in the first half of this year.
The retail segment enjoys the greatest attention, as developers continue to see opportunities in many areas of the country. As the summer period has been quite quiet so far, Colliers consultants expect modest traded volumes in the coming quarters.
As for the demand, it was divided almost equally between the retail and residential segments. However, while retail developers have remained quite active, focusing mostly on retail park/big box land in areas/cities with limited stock of modern retail space, In the residential sector, there is a more pronounced slowdown in transactions, as higher interest rates and the increase in construction costs have led to a fairly significant decrease in activity, especially compared to the period 2020-2022.
“For retail, a special note should be made regarding Bucharest, where the urban and legislative context remains uncertain. We have quite a few transactions that could be concluded if certain conditions regarding building permits/various urban planning documents were met. on the residential side, many developers still have a significant stock of land for potential projects that they could start now, but many want to wait a little longer to see where the market is headed in the short term”, explains Sînziana Oprea, director of the Land Agency at Colliers Romania.
Risks in a time of uncertainty
As a result, adds the Colliers director, “we are seeing a lot of discussions about different joint venture structures involving residential projects, as they can be mutually beneficial: developers prefer to share risks in this period of uncertainty, while landowners believe that can benefit to a greater extent from the growth potential of the market in 2-3 years”.
The supply remains at a good level, in most parts of the country, both in terms of large-sized platforms/industrial plots, as well as medium-sized plots that can accommodate different types of real estate projects. Meanwhile, some investors are looking to purchase strategic land, which retains its long-term value regardless of what happens to the economy in the short term and which also acts as an effective hedge against inflation. At the same time, prices remained more or less unchanged compared to the end of 2022, with owners not under much pressure to offer discounts, and the declining interest in new transactions rather prevented any upward movements. Very good plots, especially those with valid urban documentation, continue to have high prices.
“While we are seeing a slowdown, we do not expect the market to move to a bearish climate, which would imply a general decline in prices, unless the overall economic situation worsens dramatically. However, the coming quarters should be weaker in terms of concerns land transaction activity. We also need to recognize how important major infrastructure works are for the real estate market. The southern half of the new ring highway around Bucharest is due to be completed next year and we are already seeing increased interest in that area which will benefit from better connectivity. Otherwise, investors continue to be interested in both Bucharest and the big cities”, concludes Sînziana Oprea.
The situation in Bucharest
In Bucharest, the adjustment of the supply of new homes against the background of lower demand was highlighted in the first quarter of the year by a sharper decrease in the number of homes delivered. Only 4,666 homes were delivered in the first three months of 2023, down 16% compared to the same period last year.
The evolution of the residential market is closely related to the general evolution of the economy, and the good prospects of the Romanian economy were highlighted in the latest forecast of the European Commission this spring. Despite the slowdown in economic growth in the European Union compared to the evolution of 2022, Romania is the country with the highest projected economic growth in the CEE and the third at the EU level, with 3.2% in 2023 and 3.5% in 2024. These perspectives contributes to the positive climate for investments, along with the second lowest inflation in CEE-6 and the level of public investments in infrastructure.
2023-09-08 19:13:36
#real #estate #market #remained #active #signs #crisis #appearing #Land #sales #houses #fallen #News #sources
