New challenges for real estate market in context COVID-19
The Romanian real estate market is going through a period similar to an identity crisis that is manifested by developers dissatisfied with the yields obtained and foreign investors delaying the realization of an investment here due to the lack of liquidity and the increased risk. Today there is a gap between the returns you can get by investing in an office building in Bucharest and a placement in other capitals in Central and Eastern Europe. The acquisition of an office building in the Romanian capital brings the same yield with a similar investment in the Polish city of Poznan.
The most recent market reports show a yield of 7.25% for offices in Bucharest and 7% for those in Poznan. The higher the percentage, the cheaper the building. The country risk is also the reason invoked for the interest of the local banks on the investment loans, which are still higher than those practiced in countries such as Hungary, Czech Republic or Poland. Despite these impediments, the consumption fueled by wage increases has kept alive the desire to expand retailers, but it has reached a point where the direction of development is towards small cities, with a decreasing purchasing power. Romanians spend almost a third of their money on retail, identical to the European Union average of 30.5% in 2018, according to a GfK study. Some of the money left by Romanians in shops and restaurants goes into the pockets of the owners of malls in the form of rents. In the meantime, inflation has also affected the ability of Romanians to buy a home, with accessibility in the residential sector declining.
In addition to the fact that increased interest rates restrict the population’s access to mortgage loans, their evolution directly affects Romanians who already have loans in lei. The optimal ratio between the price of housing, wages and the cost of financing from 2015-2017 made more and more Romanians with below average incomes to meet their dreams. Last but not least, the labor crisis puts pressure on the cost of all constructions, with the risk of a higher quality discount.
Data: 28 May 2020
Unde: Event LIVE on Profit.ro TV, www.profit.ro and Facebook.com/profit.ro
Moderators: Oana Osman – Chief-Editor Profit.ro
Alexandru Urzică – Editor Profit.ro
10.00-10.05 – Opening speach PROFIT.RO – Oana Osman – Chief-Editor Profit.ro
10.05-12.00 – Tatian Diaconu – CEO, CEETRUS România
– Lori Collin – Director, Lion’s Head România