2022 was an excellent year for the Romanian investment market, according to the annual report released by Colliers. Transactions worth over EUR 1.25 billion were recorded last year - well above the EUR 890 million result in 2021 and the highest value since 2007.

The market volume was strongly boosted by the sale of CA Immo's Romanian office portfolio, a EUR 377 million deal that also set a new record for the largest deal closed on the local market, Colliers said.

Romanian capital accounted for around half of the overall volume, a record level for the local market, followed at a great distance by South African and Austrian capital, with approximately 20% and 10%, respectively. In fact, according to the same source, the volume of deals generated by Romanian capital was more than four times higher than the yearly average since 2015.

"A characteristic of the year, which underpins the market over the longer run, is the consolidation of a strong demand stemming from local investors. This attests to the strengthening of the Romanian economy in general, as capital tends to be accumulated over time when an economy matures. No surprise, then, that the input from local capital is also at all-time highs," said Anca Merdescu, Director for Investments Services at Colliers.

"On the flipside, we could envisage this leading to lower long-term liquidity, as local capital tends to focus on holding for the long term. In a note of confidence towards the local market, the bulk of transactions, over EUR 900 million, took place in the second part of the year, even closer to the end of 2022, when it was clear that sovereign interest rates were settling at much higher levels than in the recent past."

Offices continued to dominate in terms of transactions last year, with a share of 63% in the total volume of investments, followed by the retail sector (25% of the total). As for the industrial segment, Colliers consultants say the lack of available products continues to hold back market activity, as the bulk of I&L developers tend to be long-time holders, although, in recent years, there have been companies looking at sale and leaseback as an alternative for the warehouses and production facilities they own.

The year's biggest deal was the sale of CA Immo's 165,000 square meters office portfolio, which the owners of the Romanian DIY chain Dedeman purchased for EUR 377 million.

The second biggest deal saw MAS REI buy out their JV partner's stakes in a variety of newly-built retail parks throughout Romania, the second such deal between MAS REI and Prime Kapital. "Estimated at around EUR 190 million, the transaction is also interesting because the properties had an estimated exit yield of roughly 7%," Colliers said.

The third largest deal saw S IMMO purchase Portland Trust's Expo Business Park, a new office project delivered in the Piata Presei/Expozitiei submarket, for around EUR 115 million.

Colliers also said that the gap between prime assets (whether they are office, retail or industrial) located in Bucharest and those found in other major neighboring capitals shrunk in 2022. Prime yield levels for retail and industrial remained at 6.75% and 7.5%, respectively, while in the case of office, the yield on prime properties increased by 25 basis points to 6.75%.

As for 2023, it is "not necessarily shaping up to be a bad year, even though the market turnover is likely to drop. Yields will remain under some upside pressures, at least through the first half of the year, but as long as Romania's overall economic performance remains robust, the investment market should more than recover," Colliers also said.

irina.marica@romania-insider.com

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