BUCHAREST REAL ESTATE CLUB

Legislative predictability and measures to mitigate the side effects of the Covid-19 pandemic are highly needed by the business environment

• Germany remains Romania’s main trading partner: EUR 16.4 billion (+ 20.5%) is the trade volume between the 2 countries in the first 6 months of the year. The figure could exceed the level registered in 2019 (approx. EUR 32 billion), according to AHK – the Romanian-German Chamber of Commerce and Industry.

• Green energy and the identification of new energy technologies will be the main trends in the field in the coming years, in the context in which energy, the main cost associated with essential products for daily living, is becoming more and more expensive, according to CRE – Romanian Energy Center.
• In the real estate sector, the investments continue. Major players are adapting to the new realities, with a focus on sustainability and digitalization, according to BREC – BUCHAREST REAL ESTATE CLUB, the organization that gathers the largest real estate investors, with portfolios of over EUR 6 billion.
• Technology and the contribution of IT&C players continue to accelerate the local economy. Romania must continue its digitalization efforts, so that the domestic IT industry will reach a share of 10% of the Gross Domestic Product, compared to 5.7%, the level reported in 2019, according to ANIS.
• Logistics and transport keep on developing. The lack of manpower (including at senior management levels), specialized education, delayed obtaining of permits where they are needed and the slow pace of infrastructure investments are putting pressure on this sector, according to ARILOG.
• The Romanian Association for Smart City prioritizes Romania’s “smart community” strategy, based on feedback on the needs of local communities.

• HoReCa: the staffing crisis has now reached the highest level in the hospitality industry. The Employers’ Organization of Hotels and Restaurants in Romania – HORA Romania – supports projects to debureaucratize the processes of authorization of public catering units and tips regulation, essential measures to reduce the staff deficit in HoReCa and to encourage healthy development and attract investments.
• Measures are needed to accelerate the vaccination campaign, given that Romania has only reached a threshold of 31%, while Western countries have exceeded 80% and lifted restrictions. Investors point out that, although businesses active in Romania reported good results during the pandemic, factors such as inflation, rising raw material or energy costs could have a major impact on the business, along with possible new restrictions due to the pandemic. Eurofin data, one of the largest companies in the field of health and safety at work, shows that 7 out of 10 Romanian employees suffer from anxiety, a side effect of the pandemic that puts more pressure on the economy and society.

Investments continue in most of the economic sectors and the transformation and permanent adaptation to new realities remain key business priorities in the 4th quarter of 2021, concluded the participants at ROMANIA Business Forum. NEW ECONOMY AGENDA. The event was co-organized by 8 business associations, which represent some of the largest contributors to Romania’s GDP: AHK Romania – The German-Romanian Chamber of Commerce and Industry, ANIS – Employer’s Association of the Software and Services Industry, Romanian Association for Smart City, ARILOG – Romanian Logistics Association, CRE – Romanian Energy Center, HORA – Employers’ Organization of Hotels and Restaurants in Romania, Hellenic-Romanian Chamber of Commerce and BUCHAREST REAL ESTATE CLUB.

The main figures and business realities in Q4 of 2021:

GERMAN INVESTMENTS IN ROMANIA:

• Germany remains Romania’s largest trading partner, with trade volume amounting to EUR 30.9 billion in 2020. The volume of trade in the first 6 months of 2021 between the two countries was EUR 16.4 billion (+20, 5%). “By the end of 2021, we expect the figures to grow even above 2019 (about EUR 32 billion),” AHK estimates.

• Andreas Lier, President of AHK Romania, addressed the issue of sustainability, in the context of the European Green Deal, which aims to transform the European economy into a neutral one in terms of environmental impact by 2050. “The Green Agreement it includes a policy agenda that covers many areas, from carbon neutrality to the circular economy, smart mobility and more. We need a strong industrial policy and a regulatory framework for the EU Green Agreement to be a success“, says Andreas Lier, President of AHK Romania.
• The pandemic continues to have a strong impact on companies, especially in terms of supply chains. 81% of companies surveyed in an AHK survey report price increases or supply difficulties. With over 550 member companies, AHK is the largest bilateral Chamber of Commerce in Romania and is the official representative of the German economy in Romania.

ENERGY, THE MAJOR STAKE. ENERGY PRICE FLUCTUATIONS PUT PRESSURE ON THE ENTIRE ECONOMY, AS WELL AS ON THE CONSUMER

• Fluctuations and evolutions in the energy field – such as higher gas or electricity prices – will put pressure on both companies in the economy, production units and the standard of living of the final consumer, the representatives of the Romanian Energy Center (CRE) highlight.

• The taxation of CO2 emissions by the EU determines pressure on increasing the price of energy and at the same time encourages new investments in renewable technologies. This mechanism can become problematic for states where the profitability of the economy is marginal, as is the case in Romania. The solutions for our country can come from 2 main directions: endorsing support schemes in terms of energy efficiency for companies and industrial consumers and managing the decrease of energy poverty in conjunction with compensating vulnerable consumers.

REAL ESTATE INVESTMENTS CONTINUE, MAJOR PLAYERS KEEP ON ADAPTING TO THE NEW REALITIES

• Investments continue in the Real Estate sector,. The major players keep on adapting to the new trends and user requirements, by integrating technology, diversifying their portfolios and preparing for the post-pandemic stage, according to BUCHAREST REAL ESTATE CLUB.
• IMMOFINANZ continues its current investments both on the office segment (modernization of the Bucharest Financial Plaza building and its transformation into an emblematic myhive building, with high quality spaces and construction certification level for sustainable development Gold, as well as starting the process of transformation of Victoria Park building also in a myhive property), as well as in the retail portfolio (a complex refurbishment process of the VIVO! Baia-Mare shopping center is underway, on a​ ​10.000 sqm an area, which will be completed in Q4 2021).
• After completing the takeover of the Campus 6.2 and Campus 6.3 buildings in Skanska, the Austrian fund S IMMO is working on a new boutique office project – Dorobanti Office Building (5,000 sqm). Mixed-use projects, which include multiple functions and facilities are the big winners following the pandemic. AFI intends to develop a new project near AFI Cotroceni, with 3 functions: apartments for rent, offices and retail spaces and Vastint plans a new phase (offices & retail) of the mixed project from Timpuri Noi.

IT & C

• Technology and the contribution of IT&C players will accelerate the local economy. This segment continued to grow both in terms of revenue and number of employees, despite the fiscal and political unpredictability that dominates the local landscape. In order for this sector to maintain the same growth rate, ANIS recommends continuing public and private investments and initiatives in strategic areas such as education and innovation, aimed to support the medium and long term development of the local software and services industry. By supporting the adoption of digitalization, the sector can reach a share of 10% of GDP, compared to 5.7%, according to the ANIS study launched in December 2019. ANIS is the only Romanian Employers’ Association of the Software Industry and Services. The more than 160 ANIS member companies represent approximately 66% of the total Romanian IT industry and employ approximately 42% of the IT workforce.
• Regarding the impact of the pandemic on the employers and employees in IT&C, staff retention, employee satisfaction and productivity were the most affected by the “Work From Home” phenomenon, by 13%, 24% and 19% respectively, according to a survey conducted by ANIS among the IT&C companies.

SMART CITY

• The Romanian Association for Smart City prioritizes Romania’s “smart community” strategy, based on feedback on the needs of local communities.
• “We are working on macro projects on digitalization and digital transformation, Smart City and Smart Village projects, but especially community development projects in relation to the opportunities offered by PNRR”, says Eduard Dumitrascu, President of the Romanian Association for Smart City.
• In Romania there are a total of over 860 smart city initiatives. We also have relevant projects in smart villages – Sadu, Selimbar, Luncavita -, but also several other projects that develop these rural communities, located in the vicinity of large urban agglomerations, which understood the magnet role that the urban centers have and they came with solutions for increasing the quality of life or for developing the infrastructure. PNRR is an opportunity for Romania’s development, including at the level of rural communities, underlines the representative of the Romanian Association for Smart City, the Smart City industry organization with over 270 members and partners from local authorities, business, academia and civil society.

LOGISTICS:

• Logistics and transportation report steady business and growing profits. Transport and logistics companies achieved a EUR 2.88 billion turnover in 2020 (comparable to EUR 2.89 billion t/o in 2019), but with increasing profits – from EUR 142.7 million in 2019, to EUR 169.2 million in 2020, according to data published by Tranzit magazine.

• “However, several major challenges are putting pressure on the logistics sector at the moment: the lack of manpower – not only at the level of workers and specialists, but also at the higher levels of management; the lack of recognition of the sector in the national economy, hence the lack of education both at the academic level (there is no logistics faculty yet) and at the level of employers` mentality, who do not invest in staff training,” emphasizes ARILOG – Romanian Logistics Association, which brings together over 100 companies with field of activity in logistics, distribution and adjacent fields. The slow pace of public investment in infrastructure also puts pressure on this sector, major logistics players say.

• The taxation of drivers’ daily allowance proposed by ANAF brings great challenges to carriers, many of them being at bankruptcy risk; on September 29, 2021, a large protest was organized in the Capital against these regulations as well as the crisis on the RCA market and the quarantine of professional drivers.

HORECA

• HORECA’s contribution to Romania’s GDP is about 5.07%, according to the HORA Employers’ Organization, which supports debureaucratization projects and tip regulation.
• “The 3 main challenges of the industry are the lack of predictability in the context of the pandemic, the workforce shortage, as well as the very tense relationship between landlords and tenants,” said Razvan Crisan, HORA Vice President and Co-founder & CEO – Kane Group.

GREEK INVESTMENTS IN ROMANIA:

• The Greek investments portfolio in Romania reached EUR 162 million in Q4 2021, according to the Hellenic-Romanian Chamber of Commerce. Romania ranks 5th as a foreign investment destination for Greece, and this is the 8th largest foreign investor in Romania, with a percentage of 3.8% of total foreign direct investment.
• Greek investments continued, both in 2020 and in 2021. These were mainly concentrated in the medical sector but also in the retail / wholesale / tourism segments. Among the most recent Greek investments is ATENA MEDICAL CENTER – an investment of EUR 3 million. Also, in the first half of 2021, the Saracakis Group – a representative of agricultural equipment – started operating on the Romanian market and the international real estate management group Zeus acquired 3 hotel units in Bucharest.

All representatives of the economic sectors present at the event highlighted:

• the need for legislative predictability
• for dialogue with the business environment, beyond political agendas (before the adoption of legislative measures with impact on the economy)
• accelerating the digitization processes and administrative transparency at the level of public authorities
• increasing the administrative capacity and the business of attracting European funds
• a consistent focus on education and the growth of new generations of specialists (in the conditions of an increasing pressure on the local labor force)
• as well as the continuous need for sustainable taxation measures of the economy

29.09.2021

Skanska, one of the largest office buildings developers in Europe and Romania Green Building Council organization are announcing their new partnership that aims to develop the Net Zero Carbon Buildings certification through a pilot project that will be implemented in Skanska’s project that will be developed in Bucureștii Noi. Skanska and ROGCB announce their partnership and intentions at the event organized underthe World Green Building Week umbrella, the largest campaign that supports the acceleration of sustainable constructions globally.

During the event organized under the World Green Building Week umbrella, on September 22, the largest worldwide campaign to support the acceleration of sustainable buildings globally, Skanska and ROGCB announced their collaboration on the pilot project that aims to develop the Net Zero Carbon Buildings certification.

Through this certification, the Romania Green Building Council encourages real estate developers to take measures that are meant to contribute to a significant reduction in carbon emissions. The certification aims to address a series of systematic strategies that provide solutions in combating climate change, improving the health and well-being of people, and moving towards a circular, regenerative economy.

„’Building for a better society’ is not just a slogan for us, but it translates into a series of real solutions systematically implemented by Skanska in its business activities over the years, which shapes the way we design, develop and build the projects we invest in. The Skanska business development division in the CEE can serve as an example of how sustainability becomes an integral part of our entire business and shows how, based on well-thought-out sustainability strategies, we can develop futureproof buildings that have a positive contribution to the future of the real estate, with more sustainable and more efficient office buildings. Through the project to be developed in Bucureștii Noi, we set out to take another step towards achieving Skanska’s goal of reducing carbon emissions by 70% by 2030 and the final reduction to net-zero carbon emissions by 2045. This is a pilot project that will function based on a methodology that aims to assess the criteria on which the Net Zero Carbon Buildings certification will be based on”, says Andrei Ivan, Projects Director within the Skanska business development division in the CEE.

The two partners are currently working on developing the concept of this next project based on research conducted by ROGBC on solutions to reduce CO2 emissions. The two partners aspire to finally obtain Net Zero Carbon Buildings certification through the strategies implemented in this project.

“Considering that the decarbonisation of the building sector is a vital step in achieving the environmental and climate objectives aimed for at European level, the Net Zero Carbon Buildings certification will catalyze Romania’s transition towards a carbon neutral built environment., mentions Elena Rastei, Certification Director at Romania Green Building Council.

“We are glad for this partnership with ROGBC and we see it not only as a chance for us to contribute to this change but also as an opportunity to raise awareness regarding the importance of everyone’s involvement in the transition to new business models based on sustainability, that will have a decisive role in combating the climate change. Thereby, through this partnership, we want to encourage the whole chain of partners, potential suppliers, designers, and even competitors to adjoin in this initiative, because only together can we meet the global challenge of changing the environment, the society, and the economy for the better, adds Andrei Ivan, Projects Director in the business development division of Skanska in the CEE.

Skanska is a pioneer in terms of providing sustainable workspaces in Central and Eastern Europe. Skanska’s concern for the environment and the efforts invested in developing futureproof buildings are also recognized by WELL and LEED certifications, highlighting once again Skanska’s contribution in promoting a business model that encourages sustainable strategies. The Campus 6.2 and 6.3 buildings are the first buildings in Romania to obtain the WELL pre-certification, at Silver level. The Equilibrium building is LEED Core & Shell certified at Platinum level and currently operates 100% based on energy from renewable sources.