BREC Talks to Laurențiu Lazăr Managing Partner & Director Investment Services, Colliers Romania

"Romania has been historically a market searched by speculative investors, but we can notice this trend changing. We can see a stronger interest from institutional investors, which look for large buildings and excellent tenants."

The local branch of worldwide real estate services company Colliers has a history of more than 20 years on the Romanian market, offering a complete range of real estate advisory services. We took the opportunity to conversate with company’s leader about the investment market and new players on this segment.

How do you evaluate the quality of the real estate products developed in the last years? What advices would you give to developers in search for investors?

The quality of the traded real estate products has significantly improved in the last couple of years. The products that are already sold are at the same quality with those in CEE and Western regions. Also, the quality of tenants has constantly improved. We see new, large companies entering Romania, while local ones are developing at fast pace.

All of these factors translate into a strong demand for offices, retail and industrial spaces. The quality of the building and of the tenants are obvious criteria for attracting new investors. Nevertheless, developers don’t have reasons for unrealistic price expectations, as investments yields for office buildings in Bucharest are at the level of regional cities in Poland. And this gap will be reduced gradually, and not suddenly.

What are the main factors influencing the local investment market in 2018?

Investors’ appetite for real estate assets is obviously increasing as compared to last year, with the office sector taking the lead. In the first semester there have been two major deals and we believe other large transactions will follow.
The appeal of the Romanian real estate sector is given by the local vs regional yields differentiator as well as the effervescence of the local business environment, a fact acknowledged by the impressive economic increase (6.9% in 2017, the biggest in European Union).

What is the profile of the foreign investor that will enter the Romanian market and SEE region? Local/regional platforms or more likely from areas such as USA/Asia?

Romania has been historically a market searched by speculative investors, but we can notice this trend changing. We can see a stronger interest from institutional investors, which look for large buildings and excellent tenants. Of course, an effect of the market’s development is attracting top investors from regions which have not been yet extremely active on the local market (including North America and Asia).

Do we have products on the market at the standards of large, institutional investors? What must be done to attract new investment platforms in Romania?

In 2017 we had a reduced number of products at the standards of institutional investors, but beginning with 2018 we have a much larger offer. The most common opinions from them are referring to the predictability of Romania’s economic policies. I believe we need more stability in this regard to attract more institutional investors. In other words, the eternal story of structural reforms still remains on the agenda. The most important ones would be the improvement of the educational system and the development of the terrestrial infrastructure (especially roads and railways), which would significantly progress the perspective of the local economy on a longer term and, implicit, would also create new opportunities for the real estate segment.

Source: Bucharest Real Estate Club