Professional Documents
Culture Documents
Romania
Contacts
Tim Wilkinson
Joint Managing Director
+40 21 310 3100
tim.wilkinson@dtz.ro
Oana Iliescu
Joint Managing Director
+40 21 310 3100
oana.iliescu@dtz.ro
Bogdan Sergentu
Head of Valuation & Consulting
+40 21 310 3100
bogdan.sergentu@dtz.ro
Magali Marton
Head of CEME Research
+33 1 49 64 49 54
magali.marton@dtz.com
www.dtz.com 1
Economic overview
• The Romanian economic outlook has turned to the • According to Oxford Economics, 2010 would be
dark side of the statistical projections with GDP characterized as a lean year, offering little
falling abruptly to -8.7% in Q2 2009 year-on-year. nourishment for the economic recovery with both
Romania secured a financing package in the form of consumer and business confidence remaining
an instalment amounting to €19.95 billion from the oppressive. Nevertheless, the institution projected
IMF, European Commission, World Bank and EBRD 1% GDP growth for 2010.
aiming at financing the budget deficit, nourishing
reforms in the public sector and sustaining public Table 1
sector borrowing.
Indicators and economic forecast, 2009–2012
• Against the background of a reduced consumer (year-on-year comparison basis, %)
demand, financial market instability and uncertainty
Indicator 2009 2010 2011 2012
regarding prospective incomes of the population the
inflation rate diminished successively to around GDP -7.34 1.03 4.85 6.63
4.95% in August with further expectations of a Consumer Price
decrease, targeting 4.3% by the end of 2009, 5.43 2.91 3.57 3.47
Index (CPI)
according to the National Bank of Romania’s (NBR)
forecast. Unemployment rate 6.53 7.83 6.60 5.28
Consumer spending -10.31 2.30 5.29 6.46
• Industrial production decreased in August by 0.3%
Industrial production -7.21 3.95 8.35 7.30
month-on-month and by 5.0% year-on-year. There
Source: Oxford Economics
are positive expectations for further improvements
encouraged by the recovery in the economic activity
across the Euro zone as well as by the Craiova
based Ford plant announcing to start production in
September. The largest under-performance was
registered in the construction sector which decreased
by 7.9% (August versus July 2009) mainly on
account of housing construction (-22.3%) followed by
civil engineering (-4.4%) benefiting from a slight
capital injection for infrastructure.
2
Offices
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Offices
250
• The level of supply has increased each quarter due 200
to a continuing weakened demand and with large
annual supply (delivered until Q4 2009). According to 150
0
Figure 3
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Total Office Stock split by Subzone in Bucharest,
percent, Q3 2009 Source: DTZ Research
Figure 4
0.56.5
6.5 North
2.2 Centre
Office Take-up by Occupier Sector in Bucharest,
7.3 Centre - North percent, Q1–Q3 2009
46.6 Centre - West
East
15.4 Centre - South 10 4 4
Centre - East BPS
West 10 CRE
15.0 FS
2
ICT
37 IM
Source: DTZ Research 17 RET
A&M
PUB
• Rental levels have decreased since Q1 2009 to 16
about 18% for prime locations, 21% for semi-central
areas and 25% for the outskirts. A typical headline
rent for the prime areas is €21/sq m whilst in non- Source: DTZ Research; BPS – Business/Professional Services, CRE – Construction & Real
central areas rents range from €10 to €19/sq Estate, FS – Financial Services, ICT – Information, Communication, Technology, IM –
Industrial, Manufacturing, Trading, RET – Retailers, A&M – Ad vertising & Media, PUB –
m/month. Governmental, public sector, non-profit sector
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Retail
• The volume of modern retail stock1 delivered on the Source: DTZ Research
Romanian market is expected to increase in 2009 by
only 210,516 sq m GLA, representing a 46.9% Table 4
decrease year-on-year, out of which 93,016 sq m
GLA is already delivered. In 2009, the new supply of Retail Projects Completed in Romania, Q1–Q3 2009
modern shopping premises is 67% concentrated in GLA
Bucharest, meaning a 5.7% decrease year-on-year. Project City Developer
(sq m)
• If, at the end of last year, the 2009 new supply was Grand Arena Mall Bucharest 35,000
Euroinvest
expected to increase by an additional 25 modern Intermed
retail schemes (including as well the extension of two Atrium
existing shopping centres), as we approach the year- Militari Shopping
Bucharest 25,000 European
Center
end we conclude a total of only 9 projects to actually Real Estate
be completed.
Piatra
Galleria 12,252 GTC
Neamt
• Supply scheduled for delivery in 2010 amounts to a
total of 389,446 sq m GLA (corresponding to ca. 31% Galleria Suceava 10,514 GTC
of the total stock projected at the end of 2009). The Plaza Romania Anchor
majority of the schemes announced for 2010 are Bucharest 6,000
(extension) Group
actually projects initially planned for 2009, but Source: DTZ Research
postponed due the difficult economic environment
and still likely to slide further.
Table 5
• This year, the market experienced a new retail Major Pipeline Retail Projects in Romania, 2009–2010
concept as well, through the delivery of the first strip
mall, Militari Shopping Center, comprising of 25,000 GLA
Project City Developer
sq m GLA. Significant changes consist of the first (sq m)
cases of shopping centre closures – Armonia Braila, AFI Cotroceni Park
after 9 months of operation (16,459 sq m GLA Bucharest 75,000 AFI Europe
Mega Mall
commercial gallery attached to a 13,000 sq m
Carrefour Hypermarket developed by Red Sun Plaza Bucharest 76,500 EMCT
Management with a €45 million investment) and Trio Holding
West Gate Center Craiova 40,000
Trident Shopping Center in Sibiu, after 4 months of & Immoeast
operation (5,500 sq m GLA commercial gallery Iulius Mall -
attached to a 6,000 sq m Trident Hypermarket and a Timisoara 33,000 Iulius Group
extension
total investment of €15 million).
Atrium
Atrium Center Arad 30,000
Centers
Source: DTZ Research
1
Comprising retail schemes in the form of urban malls, retail parks,
commercial galleries, outlet stores and strip malls.
www.dtz.com 5
Retail
Timisoara
Cluj - Napoca
Iasi
Bucharest
0 20 40 60 80 100 120
Shopping centre High street
Source: DTZ Research
www.dtz.com 6
Industrial & logistics
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market showed signs of recovery. The total amount of
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transactions concluded by the end of Q3 2009 was
50,000 sq m out of which almost a third is represented Source: DTZ Research
50
0
2005 2006 2007 2008 2009* 2010*
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Industrial & logistics
• In terms of new developments or land acquisition, we • We believe it is a good period for companies to rethink
have seen a higher interest coming from developers or and set up their strategy for expansion, creating
end-users to identify advantageous opportunities in the presence in a certain region or building a new
market, with land prices decreasing due to a lack of distribution centre/hub, taking advantage of the current
transactions. conditions of the market, in which buyers have more
power to negotiate than in the previous years.
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Key statistics – occupier market
Table 7
Bucharest office market
Q3 Q4 Q1 Q2 Q3 Q/Q Y/Y Directional
2008 2008 2009 2009 2009 change change outlook
Take-up (rounded)* 54 40 30 25 15 -40% -72%
Total supply (rounded)* 1,120 1,190 1,281 1,378 1,427 +4% +27%
Table 8
Leasing transactions in Bucharest (Q1–Q3, 2009)
Office building Submarket Tenant Occupier sector* Area (sq m)
BOC Tower North Banca Romaneasca FS 15,000
PC Business Center North District 1 City Hall PUB 6,235
Elefterie Building Centre MKB Romexterra FS 2,700
West Gate Business Park West Ericsson ICT 2,300
Floreasca Business Park Centre-North Xerox Romania ICT 1,930
Iride Business Park North Cosmote ICT 1,800
Rams Business Park East Enel Energie Muntenia IM 1,500
* ICT – Information, Communication, Technology; IM – Industrial, Manufacturing, Trading; FS – Financial Services; A&M – Ad vertising & Media; PUB –
Governmental/NGO’s/Embassy/Public sector/Non-profit sector
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Key statistics – occupier market
Table 9
Bucharest industrial market
Y/Y Directional
2004 2005 2006 2007 2008 2009
change outlook
Annual take-up (rounded)* 40 75 113 222 260 90 -65%
Total supply (rounded)* 110 185 300 530 785 830 +6%
Table 10
Leasing transactions in Bucharest (Q1–Q3, 2009)
Industrial scheme Submarket Tenant Area (sq m)
Europolis Park A1, Bucharest–Pitesti Delamode 10,000
Equest Logistic Center A1, Bucharest–Pitesti KLG/Domo 9,000
Prologis Park Bucharest A1 A1, Bucharest–Pitesti Geodis 8,400
Prologis Park Bucharest A1 A1, Bucharest–Pitesti Omega Logistics 6,700
Atlas Project North Tornado 5,000
NordEst Logistic Park North-East Fresenius Medical Care 3,500
Equest Logistic Center A1, Bucharest–Pitesti Map Merchant 3,000
Equest Logistic Center A1, Bucharest–Pitesti Lagermax 2,500
Source: DTZ Research
www.dtz.com 10
Investment
Figure 11
• Transaction activity practically froze in H1 2009 with a
volume of approximately €26 million, representing a Total real estate purchasing activity by sector
97% decrease year-on-year. The volume diminished
€ million
by a third (quarter-on-quarter) in Q3 when institutional 250
transactions amounted to €13.3 million. The average
sale value decreased by 36% in Q3 compared to the 200
previous quarter and by 87% year-on-year.
150
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Investment
• Signs of market recovery so much related to the • Within transaction market, DTZ believes that Q1 and
lending activity is anticipated along with the narrowing Q2 2010 will be similar to this year and we will see a
cost of finance expected to generate effects after the slight return of the market values putting pressure on
NBR decision to cut the base interest rate to a level of yield margins so that prime yields will contract from
8%. their anticipated Q1 2010 level by the end of 2010.
Table 11
Significant deals Q1–Q3 2009
Price
Property Name Sector City Purchaser Vendor (million)
(initial yield)
www.dtz.com 12
Definitions
Offices
Stock: Total completed or refurbished office space (occupied and vacant), newly built since 1993, A and B class offices,
owner occupied and for lease.
New supply: Practical completions (obtaining valid occupancy permits) of new developments in a given time period.
A-Class office building: Reflects an above average fulfilment of the following criteria: air conditioning system,
suspended ceilings, floor to ceiling height minimum of 2.7m, flexibility of internal design, either three compartment
trunking for telephones, electricity and computer cable or raised floors, modern high speed elevators, maximum waiting
time of about 30 seconds, good quality fitted carpets and wall finishes, provision of secure dedicated car parking, reliable
telephone and communications equipment, dual power supply and/or power supply system back-up, humidity control.
B-Class office building: Reflects an average or typical property in that market based on the above mentioned criteria.
Take-up: The total floor space known to have been let or pre-let to tenants or owner-occupiers over a specified period of
time.
Sublease: Space offered for lease by a tenant who is contractually obliged to occupy the premises for a longer period
than needed.
Vacancy rate: Ratio of empty/vacant space in existing or newly completed buildings on the total stock.
Prime rent: Headline rent level achieved in new prime, high specification units in prime locations.
Retail
Stock: Total completed space of modern shopping premises (urban malls, retail parks, commercial galleries, outlet stores,
strip malls) completed since 1999.
New supply: Completed newly built schemes that obtained a use permit in the given period.
Prime rent: Headline rent level achieved in the most attractive shopping centres for units of approximately 100 sq m
leased to a fashion operator.
Stock: Total completed modern industrial/logistics space (occupied and vacant) developed since 2004 and offered for
lease.
New supply: Completed newly built schemes that obtained a use permit in the given period.
Take-up: The total floor space known to have been let or pre-let to tenants over a specified period of time.
Vacancy rate: Ratio of empty/vacant industrial/logistics space in existing or newly completed schemes on the total stock.
Prime rent: Headline rent level achieved in new prime, high specification units matching the needs of logistics corporate.
www.dtz.com 13
Definitions
Investment
Investment transaction: The purchase of commercial real estate for the purpose of receiving an income or rent.
Initial yield: The initial net income expressed as a percentage of the gross purchase price including the purchase costs
at the date of the acquisition.
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Contacts
Business Development
Cristian Ustinescu +40 21 310 3100 cristian.ustinescu@dtz.ro
Office Agency
Madalina Cojocaru +40 21 310 3100 madalina.cojocaru@dtz.ro
Retail Agency
Aura Voiculescu +40 21 310 3100 aura.voiculescu@dtz.ro
Industrial Agency
Rodica Tarcavu +40 21 310 3100 rodica.tarcavu@dtz.ro
Residential Agency
Mihaela Pana +40 21 310 3100 mihaela.pana@dtz.ro
Land Agency
Ionut Ciocan +40 21 310 3100 ionut.ciocan@dtz.ro
Property Management
Brigitte Schmitt +40 21 310 3100 brigitte.schmitt@dtz.ro
Investment
Mihaela Cnobloch +40 21 310 3100 mihaela.cnobloch@dtz.ro
Marketing Department
Evelina Necula +40 21 310 3100 evelina.necula@dtz.ro
www.dtz.com 15
Disclaimer
This report should not be relied upon as a basis for entering into transactions without
seeking specific, qualified, professional advice. Whilst facts have been rigorously
checked, DTZ can take no responsibility for any damage or loss suffered as a result of
any inadvertent inaccuracy within this report. Information contained herein should not,
in whole or part, be published, reproduced or referred to without prior approval. Any
such reproduction should be credited to DTZ.
www.dtz.com