The year 2023 ended with real estate investments totaling around 476 million euros, down by more than half from the peak reached in 2022 of 1.25 billion euros, according to the annual report published by Colliers.

Market volume was strongly boosted by the sale of the Mitiska REIMs portfolio of 25 retail assets to a new player, UK fund M Core, for €219m.

This result comes as no surprise to consultants Colliers, who had forecast since the start of the year that the deal portfolio would slow compared to the exceptional years of 2021 and 2022, given the already difficult deal completion environment.

Romania recorded a similar dynamic to that of other CEE markets, and the outlook remains mixed. Even if there is more clarity on inflation, central banks will not reduce the cost of money at the same speed as they have raised interest rates over the past year and a half.

In general, many homeowners and investors remain on the lookout, influenced by high interest rates, the economic slowdown and global uncertainty.

The most significant transaction of the year, and also the largest retail transaction in Romania in the last decade, was the one between Mitiska REIM and the British fund M Core, a new name on the local market and all the more notable as many funds in Europe of the West showed interest in Romania, but without advancing in any transaction.

The second most important transaction this year was the sale and lease of FM Logistics warehouses, acquired by CTP, the local industrial and logistics market leader, for an estimated value of approximately €60 million.

The third largest transaction involved the sale of the One Herăstrău building to a new player on the local market, the Latvian group Vincit Union, for approximately €21 million.

In the last year and a half, the conditions of limited financing, together with the increase in interest rates, have led to a decrease in prices and an increase in yields globally, including in Romania. However, Colliers specialists point out that Romania did not follow this trend of falling yields as strongly as other markets and the price correction was not as great.

Thus, in the absence of reference transactions that clearly indicate the state of the market, they currently estimate returns in a range. Therefore, yields for office space in Romania were between 7.25% and 7.75% at the end of last year (up from 6.75% at the end of 2022), yields for commercial space ranged between 7-7 .50% (compared to 6.75% at the end of 2022), and yields for the industrial segment ranged between 7.25-7.75% (compared to 7.50% at the end of last year).

Moreover, the I&L sector in Romania, with rents increasing by approximately 30% in the last two years, offers very good long-term opportunities. Forecasts for solid growth in the local market, in the context of the relocation of production, indicate the possibility of a slight reduction in industrial yields over the next two years, suggesting the possibility of better prices.

Consultants Colliers predict that a significant influence on long-term transaction volume could come from what they call the "primary market" of prime office buildings, i.e. those built by developers with a "build, build" business model. rent, sell".

As a small number of buildings are expected to be delivered in the coming years, this could influence future demand for office space. In the absence of this demand, pressure on yields, particularly office and, to a lesser extent, retail, remains high and Colliers consultants estimate that there is a significant likelihood of mild market growth going forward.

In conclusion, 2023 was a relatively weak year for the entire Central and Eastern European (CEE) investment market, with all markets in the region recording year-on-year volume declines of between 18% and 68%. In absolute figures, the volume of investments in the six largest economies in the region (Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia) decreased by 54% compared to 2022, reaching a level of 4.9 billion euros, the most lowest since 2012, Colliers says in its latest report "The CEE Investment Scene 2023/2024".

This development was driven by the increase in the cost of capital and the less favorable outlook for some real estate sectors, which significantly reduced investor interest. However, the decline is comparable to that recorded in other European markets.

As for yields, they rose almost everywhere in the CEE-6 region, reflecting a similar trend in advanced economies. Poland continued to be the leader from the region, with an investment volume that represented 38% of the overall total of ECE-6, followed by the Czech Republic, with a share of 23% of the 2023 volumes.