The outlook for Romania's real estate market in 2025 is marked by optimism, as 64% of investors surveyed expect an increase in portfolio values over the next year, while only 6% anticipate a decline, according to Cushman & Wakefield Echinox's third annual "Real Estate Investors Sentiment Barometer."

The survey included top management from local, regional, and global investors and developers with a combined Romanian real estate portfolio exceeding EUR 15 billion, representing approximately 50% of the country's modern real estate market.

Bucharest remains the leading destination for real estate investment, with nearly 80% of respondents targeting the capital for new ventures, compared with 66% in 2023 and 63% in 2022. 

Secondary cities and tertiary locations have also gained traction, reflecting diversification and growing interest in emerging markets outside Bucharest. Secondary cities attracted over 65% of respondents, while 31% showed interest in tertiary locations, a significant rise from previous years.

Vlad Saftoiu, Head of Research at Cushman & Wakefield Echinox, commented: "Investors are optimistic while also showing a certain degree of caution in regards to the Romanian real estate market evolution. They are predicting a consolidation of the industrial & logistics and retail segments, a stabilization of office demand, and selective portfolio growth."

"The overall real estate market performance illustrates a balance between opportunities and macroeconomic challenges, in a context of increased confidence towards economic stability and consumption growth, supported by the accessibility of bank financing, the focus on sustainability and the adoption of ESG requirements," he added.

The survey found that office rents are expected to rise, reversing earlier concerns of decline. While there were a series of concerns about potential decreases in 2023, the sentiment shifted back to optimism in 2024, suggesting a belief in a long-term upward movement of office rents. However, the 2024 growth predictions were slightly tempered for industrial & logistics assets, with an increased share of respondents forecasting stability rather than continuous growth. 

Retail rental rates showed cautious positivity, with an improving outlook fueled by strong retail sales and recovering demand. 

Inflation remains the primary factor which could influence occupancy costs in the real estate market. Construction and financing costs are also highlighted as major risks for rents across all segments.

In terms of demand, investors and real estate developers forecast a stable level for offices, with the sector moving towards consolidation, as companies are adapting to current work models rather than pursuing aggressive expansion, Cushman & Wakefield Echinox said. However, investors are more optimistic concerning the demand for retail spaces compared with previous surveys, even though there is no clear anticipation for significant changes. 

Respondents are optimistic about the logistics sector and, to a lesser extent, retail when it comes to the asset classes expected to see more investments in the coming 12 months. The sentiment towards office spaces remains cautious, while also showing slight improvement compared with the previous editions of the barometer.

In this context, most investors plan to expand their portfolios over the next three years, with bank loans (49%) and shareholder loans (19%) cited as primary financing sources.

The main negative factors concerning the real estate market are related to inflation and interest rates, while geopolitics and financial stability were also highlighted as significant risks. However, the investors' perceptions of macroeconomic stability, taxation, and labor market have improved compared with previous years.

Sustainability has become central to investment strategies, with a focus on building certifications and compliance with EU ESG Taxonomy reporting requirements. 

Investors also face challenges in managing operating costs and navigating complex legislative regulations. Property management priorities include enhancing tenant experiences and adopting data-driven solutions to improve efficiency.

irina.marica@romania-insider.com

(Photo source: Mykhailo Polenok/Dreamstime.com)