€ +600 Mil. in Major Urban Regeneration Projects in Bucharest
The former major communist industrial platforms are making way for new, vibrant urban developments. One United Properties with its major two projects One Floreasca City, One Cotroceni Park, Vastint’s Timpuri Noi Square, Fosta Fabrica by Lithuanian investor Hanner or Estoria City developed by three Romanian investors are just some examples of modern landmarks of Bucharest.
€ 300 MIL. for Central Business District Facelift
Calea Victoriei in Bucharest, the 2.8-kilometer-long artery between Piata Victoriei and Piata Natiunilor Unite, will continue to grow as an office and hotel hub in the upcoming years, with developers planning to build 7 new office buildings and 6 hotels by 2022, with a total investment value exceeding EUR 300 million threshold, according to an analysis of Cushman & Wakefield Echinox.
€ 700 Mil. in New Office Clusters: Focus on Health & Safety
The office sector is impacted by COVID and remote work, with a decrease of 36% in transactions for 2020 vs 2019 according to JLL data. Some projects are converted into residential, but investments in new office hubs have not been stopped.
Barbu-Vacarescu, Pipera, Bucharest Center-West, Center-South, Baneasa and Expozitiei are some of the most effervescent areas with projects such as Globalworth Square, Equilibrium by Skanska, Globalworth Campus, U Center by Forte Partners, The Light by River Development, Campus by Skanska, Miro by Speedwell, J8 Office Park by Portland, @Expo by Atenor.
Developers are also investing in existing properties to update them for today’s standards: Bucharest Business Park by CA IMMO, myhive by Immofinaz or One North Gate by One United Properties are to name just some examples.
Residential Sales Stay Immune: € 1 BLN In New Projects
Residential sector performs over expectations with total sales in 2020 up by 19% vs 2019 according to data of the National Cadastre Agency. The result is even more worth mentioning, given the 2 months of total lockdown in the spring of 2020. Moreover, Eurostat statistics show that 45,8% of the Romanian population live in overcrowded homes.
Given this context, both local and international developers continue their investment in new and modern residential units. BUCHAREST REAL ESTATE CLUB has gathered data for over 50 projects (delivered in 2020 or under development up to 2023 in Bucharest), totaling 1 billion EUR investments.
Retail: Shift Towards Proximity & Mixed – Use
One of the hardest hit sectors by Covid-19 pandemic context is retail, due to the lockdown and other restrictions in 2020. According to CBRE Romania research, 88% of the retailers mentioned loss of sales and 84% stated difficulty to meet financial obligations. Under this context, new developments target either proximity model or integration in mixed-use schemes.
Notable developments in Bucharest, with 2021 inauguration dates are the extension of Colosseum Mall (30 million EUR investment) and Fashion House Pallady by Liebrecht & wood (25 million EUR). Retailers in search of new expansion opportunities find valuable offers within mixed-use developments. Such is the case of One Cotroceni Park, the largest project under construction in Bucharest. The office and residential components (10.000 people working and living here) will be served by a 15.000 sqm gallery.
Logistics, The New Shining Star
With the increase of e-commerce boosted during pandemic, logistic segment is the new star of the real estate market. The total Romanian stock exceeds 5 mil. sqm, with about 50% of the stock Bucharest.
BUCHAREST REAL ESTATE CLUB estimates investments of approx. 200 million EUR by investors such as WDP (Stefanesti & Dragomiresti), CTP (CTPark Bucharest North), P3 (P3 Bucharest A1), Element Industrial (the logistic hub in Buftea – Chitila with Eli Park 1, 2 and 3 and Eli Xpress) or Global Vision. Brokers` data show a record leasing activity of almost 900.000 sqm leased during 2020, with the biggest increase coming from pharma, ecommerce and FMCG sectors.
New Infrastructure Investments
Following Covid-19 pandemic, the EU agreed an EUR 80 bln. aid for Romania to come over a period of 7 years and this is expected to considerably improve infrastructure. In fact, 2020 has seen the launch of a much-awaited infrastructure program, the M5 subway line connecting the center with the west part of Bucharest.
According to Cushman & Wakefield Echinox, the new subway line inaugurated in September 2020 will shorten the travelling time for 150.000 Bucharest inhabitants who live near the 10 newly built stations, also offering a quick travel alternative for almost 20.000 employees working in companies whose office buildings’ headquarters are located in this respective area.
Smarter, Greener, Better
With a total green buildings stock exceeding 250 buildings already in Romania according to data by green building consultant BuildGreen, the environment will be an even more important focus starting 2021. The EU`s Energy Performance of Buildings Directive imposes measures that will accelerate the rate of building renovation, strengthen the energy performance of new buildings and make them smarter.
In this context, we expect to see more integration of information and communication technology (ICT) and smart technologies to ensure buildings operate efficiently. Looking at international forecasts, Romania offers a good perspective on the long run. While 2020 decline is estimated at 4.8% by The International Monetary Fund, the institution forecasts an economic growth of 4.6%.