10
Q1 2017 City Report
Q1 2017
City Report
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
The property investment volume in the first quarter of 2017 is estimated at approximately €145 million, a small decrease when compared to the rather strong Q1 2016, when transactions of approximately €180 million were concluded. The first three months of the year, however, witnessed a significant number of direct transactions rather than share ,as was the case in Q1 2016.
Bucharest accounted for close to 30% of the total investment volume. Market volumes were dominated by Industrial transactions (close to 48%), followed by retail (41%) while office accounted for close to 11%.
The largest deal of the quarter was the acquisition of the Dacia-Renault Warehouse in Oarja, 15 kilometers from Pitesti, on the A1 Highway, by Globalworth, from the company owned by local entrepreneur - Simon Roth. This is the second industrial asset of the AIM listed fund in Romania, which is the largest office owner in the country, after the one acquired in 2014 in Timisoara.
In retail, the largest transaction was the sale of Felicia Iasi, the last standing asset of CBRE GI in Romania, to CPI, as part of a Pan-European portfolio transaction. The largest office transaction was the acquisition of Polona 68 by Topmost Invest, the same group that acquired Swan Office Park in 2016 from EEC Invest for approximately €17 million.
Despite the favorable macroeconomic environment, there is still a major pricing gap between Romania and the main CEE markets, with prime yield levels at around 150 - 200 basis points higher than those in Prague and Warsaw. Prime Industrial yields decreased by 25 bps over the quarter to 8.75%. Prime office yields are at 7.50% and retail yields are at 7.25%, remaining stable over the quarter. However, yields are still at a mid-level between the last peak and last trough.
Prospects for 2017 are positive given the projected economic growth of the country, one of the highest in Europe and the still significant yield spread between Romania and Poland or the Czech Republic. Volumes are estimated at around €800 million.
Investment Market
Unemployment rateMarch 2017GDP Growth
2016
Purchasing Power 2016, Bucharest
Inflation April2017 y-o-y
Retail Sales, Q1 2017 y-o-y
Industrial production, Q1 2017 y-o-y
4.8% 0.61% 5.3%
€6,288 7.4% 6.7%
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Prime Yields
Romanian Investment Volumes
Key Investment Transactions in Q1 2017
IndustrialShopping Centre Office
7.25% 7.5% 8.75%
Sector Property Market Est. Price (€ million) Seller Buyer
Industrial Dacia Renault Warehouse Oarja Pitesti 42 Local Globalworth
Retail Flicia Iasi Iasi 29 CBRE GI CPI
Office Polona 68 Bucharest 17 EEC Invest Topmost Invest
Retail 4 Real Hypermarkets Romania 15 Metro Group Terrazone
Retail Armonia Braila Braila 14.8 Volksbank Geelan Impex
Industrial Millenium Logistic Park Bucharest 14.2 Alpha Bank Helios Phoenix
Industrial Phoenix Logistic Center Bucharest 10 Lonestar CTP
0
500
1000
1500
2000
2500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
Office Retail Industrial Mixed Residential Hotels
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Evolution of Gross Take-up (sq m) by Sub-market, 2009-2017F
Bucharest Office Sub-markets
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2009 2010 2011 2012 2013 2014 2015 2016 2017F
CBD
Others
Baneasa
West + Center West
Pipera North
Dimitrie Pompeiu
Floreasca Barbu Vacarescu
Center North
Sub-market Stock (sq m) Vacancy Rate (%)
1. CBD 242,122 12.1
2. Centre – North 143,241 10.1
3. Floreasca – BV 411,825 9.3
4. Dimitrie Pompeiu 258,567 7.3
5. Centre – West 188,170 7.5
6. West 146,900 7.5
7. Centre 160,466 12.6
8. East 84,500 8.6
9. South 62,303 47.8
10. North 314,962 8.5
11. Baneasa 96,500 27.8
12. Pipera North 191,600 27.1
TOTAL 2,401,156 12.3
*The updated stock include buildings Class A&B, built after 2000
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Evolution of Headline Rents by Location
Completions and Pipeline 2017 Key Leasing Transactions in Q1 2017
Property Submarket Size (sq m) Quarter
Aviatorilor 8 CBD 7,200 Q1
Dorobanti 33A Center North 2,800 Q1
Timpuri Noi Square South 33,000 Q2
The Bridge ph. 1 Center West 36,200 Q3
Globalworth Campus ph. 1Dimitrie
Pompeiu29,000 Q3
Sema Park 4 Center West 28,000 Q3
BASP Victoria Office North 7,000 Q3
Property OccupierContract Type
Deal Size(sq m)
North Gate Renault Renewal 20,000
Sky Tower Oracle Renewal 10,300
City Gate Rompetrol Renewal 10,000
Globalworth Tower Huawei New lease 6,700
PC Center II CASA DE ASIGURARI DE SANATATE A MUNICIPIULUI
BUCURESTI
Relocation 5,609
Iride P&G Renewal 5,600
The Landmark Confidential New lease 4,506
West Gate Societe Generale New lease 4,000
Hermes Business Campus Genpact New lease 3,250
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
CBD Semi-central Peripheral
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Retail Projects in the Bucharest by Size
Shopping Centre Density (sq m) per 1,000 Inhabitants*
Under Construction – Romania (sq m)
8%
22%
35%
34%
Small (5,000 - 19,999 sq m) Medium (20,000 - 39,999 sq m) Large (40,000 - 59,999 sq m) Very Large (>60,000 sq m)
2017
139,300
*Including all retail formats
2018
202,200
to be completed in 2017-2018*
0
100
200
300
400
500
600
700
Total Stock
1,104,000 sq m
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Schemes Announced for 2017 – 2018 in Romania (>10,000 sq m)
Largest Owners of Retail Space in Romania Prime rents (€/sq m/month)
Shopping centres
65 - 75
Retail Parks
9 – 9.5
High street
50 - 55
*Prime rents relate to a well located 100 sq m unit shop from the fashion and accessories category in leading retail assets in capital city (for retail parks – 2,000 sqm units).
Property Format Developer Size (sq m)
AFI Palace Brasov Shopping Center AFI Europe 45,000
Festival Shopping Center Shopping Center Primavera Development 42,000
Promenada Mall Extension NEPI 34,000
ERA Park Iasi Extension Argo 30,000
Shopping City Satu Mare Shopping Center NEPI 28,700
Ramnicu Valcea Mall Shopping Center NEPI 28,000
Shopping City Galati Extension NEPI 21,000
Platinia Cluj Mixed-use Development Drusal Construct 13,000
Sun Plaza Extension S Immo 11,000
Sibiu Shopping City Extension NEPI 11,000
NEPI
21%
Iulius Group
8%
Immofinanz
5%
Others
66%
Total Stock
3,031,000 sq m
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Deliveries in Q1 in Romania:
Total Stock Evolution - Romania (sq m) Demand in Q1 2017
Net take-up (sq m)
175,300 sq m
West & North-WestCompletions: 0 sq m
South-WestCompletions: 0 sq m
CenterCompletions: 0 sq m
East Completions: 0 sq m
SouthCompletions: 0 sq m
Bucharest & Ilfov County Completions: 27,000 sq m
South – EastCompletions: 0 sq m
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2011 2012 2013 2014 2015 2016 2017F
Bucharest City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Net take-up by Sector in Q1 2017
Key Transactions in Q1 2017 Pipeline 2017 (Selection)
Tenant Property Size (sq m)
Deal Type
Sector
NOD CTPark Bucharest West 30,954 New lease Logistics
Profi WDP Roman 27,000Built to
suitRetail
Altex P3 15,000 New lease Retail
Carrefour WDP 11,500 New lease Retail
Confidential Confidential 10,500 New lease Confidential
Project Location Size (sq m) Type
CTPark Bucharest West Bucharest 68,000 Extension
P3 Logistics Park Bucharest 60,000 Extension
WDP Otopeni Bucharest 38,000 New Project
CTPark Timisoara Timisoara 35,000 Extension
Logistics39%
Retail31%
Production14%
Other16%
175,300 sq m
jll.ro
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.
Andrei DrosuSenior Research Consultant
Capital Markets
+4 0745 930 [email protected]
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