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Romania Real Estate Report Q3 2011

Romania Real Estate Report Q3 2011

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Additional Information

Price	$530.00
Publisher	Business Monitor International
Date of Report	Jun 24, 2011

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Quick Overview

Growth is now on the way for Romania’s real estate sector after a buffeting from the economic downturn. Romania has finally exited its deep two-year recession. The Romanian economy grew by 0.6% quarteron- quarter (q-o-q) seasonally-adjusted (SA) in Q111, which follows the 0.1% q-o-q SA growth seen in Q410. Our forecasts for economic growth of Romania’s economy are being increasingly reinforced by the measurements of official agencies, which are heading upwards towards ours. Our long-held forecast is for real GDP growth of 2.1% y-o-y over 2011, accelerating to 3.7% in 2012.
After the sharp but temporary drop in Romanian exports in late-2008, exports rose by a miraculous 47.7% year-on-year (y-o-y) in January 2011. Also, Romania’s industrial base has, concomitant with exports, raced back into action over the course of 2010. Industrial production increased by 11.8% y-o-y in January 2011, and we expect continued gains over the course of 2011.
While these factors will drive the real estate market, Romania’s financial fragility and reduced credit availability will act to slow the market’s recovery.
In the office sector, rents have bottomed out, after decreasing in some areas late in 2010. This follows a period of very high vacancy rates and reduced take-up. However, these are beginning to improve and rents are expected to enter a period of relative stability.
The industrial market is beginning to pick up, after three years of relative stagnation. Exports and industrial output are surging ahead, and consumer confidence is increasing. Industrial production is rising, and demand is beginning to grow. The supply of space is also high, with availability up. The surplus space will take time to be absorbed.
Retail sales declined over 2010, and have continued to fall through to February 2011. However, there was a month-on-month increase in February, giving grounds for optimism. Demand in the retail real estate sector was very low in 2010; however, it has picked up substantially in 2011. There has been significant interest from international retailers. Retail rents are expected to stabilise. Newly increased demand is generally balanced with a growing supply of new space.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 6
Romania Real Estate/Construction SWOT ............................................................................................................................................................ 6
Romania Economic SWOT .................................................................................................................................................................................... 7
Romania Business Environment SWOT ................................................................................................................................................................ 7
Real Estate Market Overview .......................................................................................................................... 8
Key Issues ............................................................................................................................................................................................................. 8
Real Estate Analysis.............................................................................................................................................................................................. 9
Comments And Data From In-Country Sources .................................................................................................................................................... 9
Table: Romania’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, EUR) ................................................................................. 10
Table: Romania’s Real Estate Market – Net Yield, 2010 And 2011 (%) .............................................................................................................. 10
Table: Romania’s Real Estate Market – Terms Of Rental Contract/Lease, Mid 2010 ......................................................................................... 11
Industry Forecast Scenario ........................................................................................................................... 12
Real Estate Outlook ............................................................................................................................................................................................ 12
Table: Romania’s Real Estate Market – Rentals, 2010-2012 (m²/month, EUR) ................................................................................................... 13
Table: Romania’s Real Estate Market – Forecast Net Yield, 2008-2015 (%) ...................................................................................................... 13
Construction Industry Outlook ............................................................................................................................................................................ 14
Table: Romania Construction And Infrastructure Industry Data, 2007-2015 ...................................................................................................... 14
Table: Romania Construction And Infrastructure Industry Data, 2012-2020 ...................................................................................................... 15
Macroeconomic Outlook ..................................................................................................................................................................................... 17
Table: Romania – GDP by Expenditure, 2008-2015 ........................................................................................................................................... 19
Business Environment ................................................................................................................................. 20
Real Estate/Construction Business Environment Ratings ................................................................................................................................... 20
Table: Europe Real Estate/Construction Business Environment Rating .............................................................................................................. 20
Romania’s RECBER ........................................................................................................................................................................................... 21
Romania’s Business Environment ....................................................................................................................................................................... 22
Table: BMI Business And Operation Risk Ratings .............................................................................................................................................. 22
Table: BMI Legal Framework Rating ................................................................................................................................................................. 24
Table: Labour Force Quality .............................................................................................................................................................................. 27
Table: Emerging Europe – Annual FDI Inflows ................................................................................................................................................. 29
Table: Trade And Investment Ratings ................................................................................................................................................................. 31
Table: Top Export Destinations, 2002-2009 (US$mn) ........................................................................................................................................ 32
Competitive Landscape ................................................................................................................................ 34
Company Profiles .......................................................................................................................................... 35
Adama Holding/Adama Romania ....................................................................................................................................................................... 35
Plaza Centers NV ................................................................................................................................................................................................ 37
Strabag ............................................................................................................................................................................................................... 39
TriGranit............................................................................................................................................................................................................. 40
BMI Methodology .......................................................................................................................................... 42
How We Generate Our Industry Forecasts ......................................................................................................................................................... 42
Construction Industry ......................................................................................................................................................................................... 43
Bank Lending ...................................................................................................................................................................................................... 44
Real Estate/Construction Business Environment Rating ..................................................................................................................................... 44
Table: Weighting Of Indicators .......................................................................................................................................................................... 45
Project Finance Ratings Indicators .................................................................................................................................................................... 48
Table: Design And Construction Phase .............................................................................................................................................................. 48
Table: Commissioning And Operating Phase – Commercial Construction ......................................................................................................... 49
Table: Commissioning And Operating Phase – Energy And Utilities .................................................................................................................. 50
Table: Commissioning And Operating Phase – Transport .................................................................................................................................. 51
Sources ............................................................................................................................................................................................................... 52