Page 36 - bne_Magazine_May_2018_print

36 I Special report bne May 2018
Romania risks losing its moment in the
property investment sun
pipeline,” says Ana Dumitrache, head of investment properties Romania at CBRE.
“I think interest is finally coming this year, but if you look at what can be traded, we might see a spike in activity in office trading and there would defi- nitely be interest in retail and industrial, but I think stock in shopping centres and industrial space is so tightly held, I don't see a lot of activity in these two sectors,” agrees Miklo.
The Romanian market is already domi- nated by two major investors – Global- worth and NEPI – and given the rela- tively low amount of available property, others may be deterred from entering a market where two players are so strongly established.
Lucrative niches
This is not to say there aren’t oppor- tunities. The conference took place at the Radisson Blu hotel in downtown Bucharest, which itself was the subject of a change of hands last year, in a rare transaction in the niche hotel sector.
Badea, whose firm advised on the deal, stressed that the transaction – the largest single deal in the history of Romanian real estate with a non-typical asset class – had brought in fresh capital (the buyer of the Radisson Blu and adjacent Park Inn hotel were Revetas Capital Advisors LLP and Cerberus Capital Management) and could be followed by more nice deals.
“We have asset classes not tapped into – residential, student housing like in Poland and Western Europe – there are classes that might become a product
to answer a demand,” she says. “That’s
BRICKS & MORTAR:
Clare Nuttall in Bucharest
International real estate investors including major European institu- tional investors are actively looking for opportunities in Romania, but the lack of high quality developments on the market is proving a problem.
Speakers at the SEE Property Forum
in Bucharest on March 28 confirmed that they had been approached by “traditional” investors including German funds, and anticipated a window of 12-24 months ahead during the peak
of the current growth cycle as a time when Romania real estate would become increasingly attractive as opportunities in the more mainstream markets of Central Europe start to dry up.
Markets like Poland, the Czech Republic and Hungary have been extremely active in recent years, but with yields now falling, and the small Hungarian market in particular rapidly running out of product, investors are looking at Roma- nia as well as other Southeast European economies.
Thus far, said Robert Miklo, direc-
tor of investment services at Colliers International, the boom seen in CEE in recent years “stopped on the doorstep of Romania” but he believes there is reason to be optimistic that the flow of invest- ment will materialise in Bucharest in the near future.
Other professionals concur. They cite approaches from German funds, among others, though as Silviana Peter Badea, managing director – Romania at JLL, points out, while a lot is happening in terms of behind the scenes negotiations, “there is not a lot of hard evidence of transactions yet”. On the other hand, she anticipates that “this year we will see
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the right names coming here, the type
of investors that put Hungary on the map. We've been waiting for this for a while, and we are now at the peak of the market. As investors are pushed out of Poland and the Czech Republic by falling yields, Romania is the next large market they can play with.”
Assets gobbled up
The main problem that lies ahead, spanning the office, retail and logistics segments, is a lack of attractive product. This is not peculiar to Romania; Lila Pateraki, chief investment officer at Zeus Capital Management, says it is evident in all the CEE markets, where her firm is finding it increasingly difficult to iden- tify products that fit its strategy.
“The growth seen in Romania’s real estate sector stopped last year. There were a lot of transactions in 2014 and 2015 that took out of the market the majority of the available product. When investors come here trying to find product – not distressed but core assets – there is a handful if any.”
For example, Romania saw a mini-boom in logistics deals in the mid 2010s, with deals like CTP’s purchase of ProLo-
gis’ Romanian logistic park. But those
"Poland, the Czech Republic and Hungary have been extremely active in recent years, but with yields now falling"
transactions gobbled up most of the available assets. “Now everybody is building because there is nothing left to be bought here, there is no acquisition
what we can take out of the Radisson transaction: there are new kids on the block as long as you offer them what they are looking for.”