Bucharest City Report Q4 2022
The latest data about Romanian real estate market is available
- Alexandru David
Although Romania’s GDP was expected in July to reach a growth rate of 3.5% at the end of the year, this figure was revised in October to 4.6%, and again in January 2023 to 4.9%. However, the projections for 2023 are considerably weaker, at 2.8%, according to the latest national prognosis.
In December, the annual inflation rate reached as high as 16.4%. The average inflation for 2022 was 13.8%.
Total investment volumes for Q4 2022 reached approximately €597.5, 81% above the previous quarter and 77% over Q4 2021. During 2022 overall, investment deals worth over €1.25 bln. were concluded, 39% above 2021. This is the highest volume recorded since 2007.
By far the largest investment deal closed in Q4 2022 was the sale of CA Immo’s office portfolio in Bucharest, consisting of 7 buildings with a total GLA of 165,000 m², to local investor Paval Holding, for a reported €377 million.
During 2022 overall, a total of 286,100 m² of office space were rented in Bucharest, a figure similar to the one registered in 2021. However, net take up increased by 3% compared with 2021, to 140,500 m².
Gross transactions volume in Bucharest in Q4 2022 totaled almost 8 5,000 m², 29% over the previous quarter, but almost the same as Q4 2021.
Overall, during 2022, 124 ,500 m² of office buildings were delivered in Bucharest, 49 % below deliveries in 2021.
Approximately 104 ,000 m² are expected to be added to the market in 2023, a decrease of 16 % when compared to deliveries in 2022.
High inflation continues to play a major part in limiting retail sales growth. In November 2022, retail sales increased by 3.0% y o y, while for January November 2022 the growth rate was 5.2% compared to the same period of 2021, according to the official statistics.
The largest delivery in Q4 2022 was the extension of the Prima Shopping Center in Sibiu with a Jumbo store of 15,000 m². The project is developed by Oasis Retail Development & Consulting.
Although supply was low during 2022, a total of approximately 270 ,000 m² GLA are expected to be completed during 2023, 2.7 times over 2022. Moreover, 2023 will mark the return of large shopping center projects, beside the retail parks, characteristic for the last two years.
Continuing the trend of the previous quarter, Q4 was also very favorable for the Industrial market in Romania, with gross demand reaching 370,000 m² , 14% more compared with the previous quarter, but 23% below Q4 2021.
Same as in the previous quarter, deliveries were strong also in Q4 2022, totaling approximately 270,000 m², 16% above Q3 and 11% over deliveries in Q4 2021.
The level of new residential units’ transactions in Q4 2022 was situated somewhere around 10,050 units for Bucharest and 1,820 units for Ilfov. This represents a surprising 20% increase from the previous quarter, showing the fact that the residential market is most probably moving out of inertia, but under the current market conditions this momentum is unlikely to be sustained in the following quarters.
The 10.7% y o y increase for the overall individual transactions registered in Bucharest combined with the decrease of 4.8% for Ilfov suggests the beginning of a demand shift from new units to second-hand market, given the current market conditions.