Romania is offering real estate investors some of the best opportunities in central and Eastern Europe and should become a popular destination for international capital in the long term due to its strong fundamentals, according to major investors in the region.
Speaking during an Oct. 9 panel discussion at the EXPO Real international property conference and exhibition in Munich, investors introduced as "the major actors across the central and Eastern European real estate market" said the strength of Romania's development in recent years boded well for its future.
Katarzyna Zawodna-Bijoch, president and CEO, commercial development unit in CEE for multinational developer and construction company Skanska AB (publ), said the Romanian commercial property market deserved even greater interest from international investors given the country's attributes.
"All the reasons are there to make that market really interesting for investors," Zawodna-Bijoch said. "Romania has a very well educated population, good building stock, a lot of new products, high-quality products."
Skanska has delivered several major projects in Romania, the latest of which is a 40,700-square-meter office complex in the north of the Romanian capital, Bucharest.
Changes in government that have introduced more transparency to the market and the country's recent upgrading to emerging market status were necessary for Romania to "really succeed," Zawodna-Bijoch added.
Investment in Romanian commercial real estate in the first half of 2019 was "one of the best first semesters in the post-crisis period," according to a report by Colliers International. Investment in the market looks likely to exceed €1 billion in 2019, it said.
Office investments made up 62% of the €345 million total investment in the first half of the year, the report added. Investors can expect yields of about 7.25% for prime office assets in Romania, compared to yields of between 4.50% and 5.50% in the neighboring CEE capitals of Warsaw, Budapest and Prague, Colliers data shows.
Remon Vos, CEO and founder of CTP Invest spol. s r. o., which owns a 5.5 million-square-meter network of business parks across CEE, said he liked the Romanian market and "supported it a lot." CTP has already invested about €500 million in Romania and plans to invest another €100 million in the next year, he said.
"There are a lot of opportunities," said Vos, adding that he would like to see some of the large number of young Romanian professionals who work abroad return to the country. "They will also support GDP growth going forward," he said. "But I think Romania is doing well and I see a good future for the country."
Troy Javaher, managing director of Lincoln Property Co. Europe, which has approximately €250 million invested in CEE and a £750 million mixed-use development in Reading, U.K., said there are some misconceptions about the Romanian market that mean it still has plenty of room to grow. "Romania has a great story," said Javaher. "It's, unfortunately, overlooked for all the wrong reasons. People perceive it as illiquid, and it's not."
Too many investors in the Romanian property market "try to eat the entire cow in one meal" in hoping that one large investment will allow them to make a quick return, Javaher added. "The best way to make money [in the Romanian market] is to recycle," he said. "You take what you get and you do the next project, and the next project."
"Romania has a tremendous path ahead of it," said Javaher. "And we're quite bullish about it."