CB RICHARD ELLIS

MarketView
Romania Property Investment
H1 2009

OVERVIEW

The rapid slowdown in property investment in the second half of 2008 (a volume
Quick Stats five times lower than in H1 2008) became even more abrupt in the first six months
Change from of 2009. The total volume of € 56 million in H1 2009, the smallest in the last five
H1 H2 years, was 17 times lower than the investment in the same period of 2008 and three
08 08
times lower than total investment in H2 2008. This trend in investment in Romania
Volume 
is not unique in the Central & Eastern Europe (CEE) market, rather the trend in
Prime yield  Romania is quite similar. One of the reasons for the local market’s decrease in
volume is that institutional buyers are now looking toward the Western European
markets, which have already registered the greatest price corrections (London,
Madrid, Barcelona or Paris). At the same time, the difference between the
Hot Topics expectations of buyers willing to make investments for low prices and the
expectations of sellers who are not willing to sell at such a low level widened
• Property investment considerably.
volume in H1 2009 came
to € 56 million, three A new market trend evident in the first half of 2009 was greater activity by local
times lower than in H2
investors, who were drawn into the market in greater numbers by price corrections.
2008.
Local investors were responsible for three of the seven total hotel purchases in H1
2009, with prices ranging from € 1.2 million to € 12 million.
• Hotels were the most
traded type of property in
the first six months of After three consecutive years in which the greatest percentage of investments was
2009, with 60% of the targeted toward the retail market, the hotel sector led the way in H1 2009, with 60%
total volume being of volume. Two 4-star hotels in Cluj-Napoca, one 3-star hotel in Bucharest and one
directed toward four
2-star hotel in Neptun proved to be attractive for investors.
hotels in three cities
across the country.
Most of the deals in H1 2009 were share acquisitions, and two of them involved the
Austrian company Immoeast. After selling its shares in seven real estate projects in
which it had a joint venture in Q4 2008 to S+B Gruppe, Immoeast purchased the
shares of European Future Group and Eyemaxx in four projects and, respectively,
three projects and two lands they were developing together in the first six months of
2009 .

Investments volume in Romania and number of deals

Volume Number of deals

1200 30
1000 25
number of deals
million euro

800 20

600 15
400 10
200 5
0 0
2003 H1

2003 H2

2004 H1

2004 H2

2005 H1

2005 H2

2006 H1

2006 H2

2007 H1

2007 H2

2008 H1

2008 H2

2009 H1

Source: CB Richard Ellis

©2009, CB Richard Ellis, Inc.

 OFFICE MARKET Investments volume in H1 2009, by city
MarketView Romania Property Investment

The only transaction in the first six months of the

year with an office component (as part of a multi-use 20
portfolio transaction) was the purchase made by 18
16
Immoeast of 10 percent of European Future Group

million euro
14
in the joint-venture office project Meteo Business 12
City. Delivery of this development, which is situated 10
in the northern part of Bucharest, has been 8
announced as occurring over three phases with 6
approximately 40,000 sq m net rentable area; at 4
2
present the project construction is stopped.
0

RETAIL MARKET Cluj- Bucharest Multi-City Ploiesti Neptun

Napoca
The retail investment market in Romania was not
active in the first half of the year, when the only sale
registered was that of the Zenith Mall project in
Ploiesti City. Though the project was in an advanced
stage of planning (the mall was projected to offer
59,000 sq m), difficulties with regard to securing
development financing for construction led Lewis Prime yield evolution, by property type

Charles Romania Property Fund to sell the future

project to the Irish company Blackpearl Property
Limited. Offices Retail Industrial

INDUSTRIAL MARKET 11
10
prime yield (%)

9
Immoeast purchased the 50 percent that Eyemaxx
8
had in three industrial projects developed as a joint-
7
venture. The Austrian company thus became the
6
sole owner of Log Center Timisoara (the first part of
5
this development is already completed and leased,
4
while the following phases will lead to a total area of
2006 2007 2007 2008 2008 2009
62,000 sq m), Log Center Ploiesti (1st phase
H2 H1 H2 H1 H2 H1
completed in 2008, while the total area after
finalization will be of 60,000 sq m) and Log Center
Brasov (the future total area of the project: 56,000
sq m, out of which 1st phase finalized in 2009, Prime yields – H1 2009

14,000 sq m).
H1 H2 H1
PRIME YIELD 2008 2008 2009

The process of yield decompression which started in Offices 7.5% 8.5% 9.5%
the first quarters of 2008 continued in 2009, as in
other CEE markets. It is to be expected that yields Retail – shopping 6.5% 8.0% 9.5%
will maintain this trend until the end of 2009, as centers
institutional buyers are now extremely cautious Retail – high-street 7.5% 8.5% 12.0%
regarding investments in this region. The evolution
of the economic climate in general, with its influence Industrial 8.0% 8.5% 10.0%
on the real estate market, represents an extra
element of pressure on yields. The imbalance
between demand and supply in certain segments of
the market caused vacancy rates to increase and
put downward pressure on prime rents, which also is
a sign of a possible prices correction in the future.
H1 2009

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©2009, CB Richard Ellis, Inc.
Definitions

Prime rent – typical “achievable” open market headline rent (can be hypothetical) for a unit of standard size
commensurate with demand in each location, of highest quality and specification and in the best location in a
market at the survey date. It does not need to be identical to any of the transactions, particularly if the deal flow is

MarketView Romania Property Investment

very limited and made up of unusual one-off deals;

Prime yield – represents the yield that an investor would receive when acquiring a grade/ class A building in a
prime location (for offices in the CBD for example), which is fully let at current market value rents. Prime Yield
should reflect the level at which relevant transactions are being completed in the market at the time but need not
be exactly identical to any of them, particularly if deal flow is very limited or made up of unusual one-off deals. If
there are no relevant transactions during the survey period, a hypothetical yield should be quoted, and is not a
calculation based on particular transactions, but it is an expert opinion formed in light of market conditions, but the
same criteria on building location and specification still apply;

Vacancy rate – a ratio of vacant space to total stock;

Make-up of CEE sub-regions: Central Europe: Czech Republic, Hungary, Poland, Slovakia; Southeastern
Europe: Bulgaria, Croatia, Montenegro, Romania, Serbia; Eastern Europe: Russia, Ukraine.

For more information about MarketView, please contact:

Radu Lucianu
Managing Director Romania,
CB Richard Ellis | Eurisko
Europe House,
51 – 53 Lascar Catargiu Blvd.,
Sector 1, Bucharest
t: +40 21 313 10 20
e: radu.lucianu@cbre.com

Adrian Nicolescu
Manager Valuation & Advisory Department
CB Richard Ellis | Eurisko
Europe House,
51 – 53 Lascar Catargiu Blvd.,
Sector 1, Bucharest
t: +40 21 313 10 20
e: adrian.nicolescu@cbre.com

Disclaimer 2009 CB Richard Ellis

Information herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and
make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any
projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the
market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written
permission of CB Richard Ellis.
© Copyright 2009 CB Richard Ellis
H1 2009

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©2009, CB Richard Ellis, Inc.