The first quarter of 2024 ended with real estate investments totaling 202 million euros in Romania, an increase of 69% compared to the first three months of 2023, with transactions in the retail segment accounting for approximately two-thirds of the volume, according to the Colliers report "CEE Investment Scene Q1 2024." Romania demonstrated the best performance compared to the other five major economies (Bulgaria, Czech Republic, Hungary, Poland, and Slovakia) in Central and Eastern Europe (CEE), in a context where market activity in the region was reduced, and transaction volumes were among the lowest levels of the past decade.

Colliers consultants appreciate that the real estate market outlook remains fairly solid in the region, with environmental, social, and governance (ESG) criteria becoming increasingly relevant for real estate investors, banks, and tenants in the decision-making process.

Overall, the total investment volume in the six CEE countries decreased by 15% compared to the first quarter of 2023, to approximately 1.2 billion euros, in line with dynamics in other regions of Europe and many other areas of the world.

The Czech Republic became the new leader in the region, with investment volumes representing 46% of the total of the six largest Eastern European countries, surpassing Poland, which had a cumulative share of 30% of the volumes traded in the first quarter of the year. However, the results varied significantly in the region, from a 94% drop in activity in Slovakia to a 69% increase in Romania.

From another perspective, Romania's performance is quite encouraging, especially compared to other much more developed markets, such as Poland or the Czech Republic, when considering the period before the pandemic.

Thus, in the first quarter of this year, our country accounted for 16% of the region's total investment volume, compared to 5-7% in the years before the pandemic. However, there are still multiple short- and medium-term challenges, warns Laurențiu Lazăr, Managing Partner & Head of Investment at Colliers Romania, although the long-term potential remains solid, given that Romania contributes over 18% of the gross domestic product of the six countries in the region.

The retail sector was dominant in Romania in the first quarter of 2024 in terms of transactional activity, with a share of about 66% of the total investment volume in commercial real estate assets, followed by the hotel sector, with a share of approximately 21%.

At the CEE level, the retail sector is also the new leader, representing 43% of the volumes traded in the first quarter of 2024, followed by hotels with a share of 20% and I&L with 15%.

The volume of investments in offices continued to decline in the first three months of the current year, representing only 13% of CEE volumes. Bucharest has one of the highest investment yields in the region for the industrial and office building sectors (7.5% for prime assets) and retail (7.25%).

Colliers only considers finalized transactions where payment and transfer have been made. Thus, a major transaction estimated at approximately 170 million euros - the sale of Globalworth's industrial assets to CTP - could be included in the second quarter if both parties adhere to the established schedule.

With this transaction and others at various stages that could be completed by the end of the year, there is a prospect that 2024 could be a better year than 2023. This trend could be further strengthened if the European Central Bank begins to relax financial conditions by lowering the monetary policy rate.

In this context, Colliers experts estimate a transaction volume of at least 600 million euros for the entire year 2024, compared to approximately 476 million euros in 2023. (Laurențiu Lazăr, Managing Partner & Head of Investment Colliers Romania) (Photo: Dreamstime)