Latest News  

Colliers: Outsourcing businesses, prominent pillars of the office sector

Real estate market has gained momentum and transaction volumes will be close to Euro 800 million by the end of the year, encouraged by stable economic environment and growth potential.

2015-11-24 12:26:20 - by Bogdan Tudorache

Outsourcing businesses are still the prominent pillars of the office sector, as Romania becomes more visible for reputable BPOs, SSCs and IT companies, with focus on Bucharest, but also secondary cities.

More than 60,000 people are currently employed in outsourcing activities and forecasts provision up to 150,000 in the next 5 years. Characterized by vibrant activity, office sector in Bucharest is on the verge of a new era of premium quality deliveries in what is to become a half million sqm office hub by 2020, Floreasca – Barbu Vacarescu area, according to Colliers Q3/2015 Market Report.

"Aligned with our expectations from the beginning of the year, real estate market has been characterized by general positive evolution for transactional activity for all sectors. Relying on good macroeconomics indicators, the year brought more intense consumption and higher interest in investment," says Ilinca Paun, Managing Director of Colliers International (photo).

"With take-up picking up and vacancy rates reporting low record levels, developers felt confident enough to start projects across the entire market. Industrial sector will add new stock to the static inventory registered in the past years, while investment market continues to post remarkable results this year also, with total volume expected to reach Euro 800 million by the end of the year", Paun adds.

The current year continued the growth trend begun in 2014 and saw a real estate market dominated by more courageous players. As forecasted at the beginning of the year, Romanian investment market witnessed sizable transactions value wise, exceeding Euro 100 million threshold, and international investors either entering or consolidating their positions on the local market.

Office Market

Floreasca – Barbu Vacarescu sub-market stands out as the new CBD area in Bucharest. The modern stock of buildings in the area was subject to the biggest part of the demand, with 215,000 sqm leased in the past five years. The area will continue to be in the spotlight in the years to come, 155,000 m2 GLA of office space being planned for development. Nevertheless, the competition in the sub-market becomes fiercer with each new announced development. Based on our extensive analysis, three main sources are to generate the future supply in the area: new companies entering the market, companies that will see their leasing agreements coming to maturity in the next years and those located in poor quality buildings that want to upgrade their location.

"In the past years, Romania not only has undoubtedly become an attractive destination for outsourcing industry, but has also changed the way it's being perceived by large companies. Romania is no longer seen solely as a cost-effective destination, but rather a value-added generator and valuable talent pool. Similar to previous years, in 2015 also, the business services industry has driven most of the office demand. We foresee this trend will grow stronger in the future and Floreasca-Barbu Vacarescu area alone is expected to generate up to 300,000 m2 potential demand in the next five years as renowned outsourcing companies are consolidating their business on the local market, but also new players have entered or announced their presence in Romania," said Andreea Paun, Associate Director Office Agency, Colliers International.

Investment Market

The investment market attracted new investors that will have closed by the end of the year transactions worth ca. Euro 800 million, close to the level registered in 2014 of Euro 950 million, being supported by the positive economic context and development of real estate fundamentals, and a yield crunch in competing markets. With more than 3% GDP growth expected for the end of the year, Romania outpaces other European countries and has the smallest public debt to GDP in EU, 38% compared with EU's 90% average.

Bucharest's prime yields are some of the highest in CEE capital cities and have seized investors' interest. With 7,5% yield for office sector, similar for retail and approximately 9% for industrial, with continued downwards pressure, Bucharest offers investors a wide range of high quality real estate assets.

Year to date, Colliers originated and advised on closed transactions of more than Euro 350 million, including the largest deals on the market for industrial – sale of Europolis Logistics Park, retail – sale of Auchan Titan Shopping Center and office – sale of two institutional office properties.

"2015 investment volumes are expected to be similar to that of last year, the difference being that the
market is becoming more diverse with new sources of capital being attracted by the relatively high returns achievable with high quality investments. Moreover, it is notable that large volume transactions (Euro 50 – 100 million) are taking place across all sectors: office, retail and industrial, a positive indication to investors interested to enter the market with scale. With strong asset fundamentals, capital markets liquidity improving and the still generous yield levels present in all sectors, we believe an important arbitrage opportunity is still present in Romania," said Robert Miklo, Associate Director Investment Services, Colliers International.

Bucharest Industrial Market

Industrial market resumed activity and is looking ahead at a future period of increase. For the first time in the last years, Bucharest's logistic stock is expected to increase by the end of 2016 considering that more than 100,000 sqm of new projects currently under construction will be added to the current stock. The constant volume of logistics stock has contributed to lower vacancy rate, reaching values below 8% in H1/2015 on Bucharest market. The new industrial stock will be available at sustainable rent levels ranging between 3.5 – 4.15 Euro/sqm.

"Industrial investments are entering a new era of growth as the interest in spaces and locations in Romania is rising in the late period. Not only Bucharest is seizing investors' enthusiasm, but also other large cities are rivalling the capital, such as Timisoara, Arad, Brasov, Pitesti, Sibiu, etc. The end of the year should reveal a stable and mature market, with new developers ready to consolidate their position. The new stock announced to be delivered next year stands to prove this trend," said Costin Banica, Senior Associate Industrial Agency, Colliers International.

Retail Bucharest market

Based on forecasted increase of household consumption, Bucharest is expected to sustain more than 100,000 sqm of additional non-food retail spaces by the end of 2018. Taking into account future announced projects, Bucharest will be able to sustain total retail inventory above 900,000 sqm. The stock increase will be supported by household consumption evolution which is forecasted to be on a constant upward trend in the future years, reaching 603 Euro/household/month in 2018.

"The economic stability and overall positive vibe of the market, has triggered a more confident behaviour of Romanians. This translated into higher revenues and retail market saw higher turnover volumes compared with previous year, rising up to 10-15% in 2015. This boost of confidence is also visible regarding deliveries, which have doubled this year compared with previous year," said Liana Dumitru, Associate Director Retail Agency, Colliers International.

Bucharest Land Market

North Area and Theodor Pallady have been the most active transactional areas in Bucharest in the past 2 years. Bucharest's northern part, which includes Aviatiei, Barbu Vacarescu, Caramfil, Dimitrie Pompeiu and Floreasca areas, has supported more than Euro 100 million worth investments in land plots, over 20 ha being transacted in this period of time. For Theodor Pallady, residential and retail sectors have fuelled the transactions of 50 ha in total, worth over 60 million Euro.

"We see increased transactional activity on the land market, across all segments, given the good performance of office leasing segment, of retailers and also residential sales. Aviatiei and Theodor Pallady were the most transacted areas, driving together total investments bigger than Euro 150 million, followed closely by Grozavesti-Politehnica. However, the residential land market was dynamic throughout the entire Bucharest, including the very peripheral areas with improving infrastructure. Price levels are stable and depend to a large extent on the plot destination and the status of the zoning process," concluded Sinziana Oprea, Associate Director Land Agency, Colliers International.


0 COMMENTS ^ Go back to Top
WRITE A COMMENT ^ Go back to Top
 
Your email address will not be published.
Nickname
Email
Comment
Validation Code
   
 
 
NEWS
Microsoft report: Romania registers average malware attack rate of 7.46 per cent, over European average

Romania reached a 7.646 per cent malware attack rate in 2018, 2.13 per cent higher than the average European rate, according tot eh 24th edition of Microsoft Security Intelligence (SIR), released recently.

 Read Full article »
Blockchain StartUp Swazm signs partnership with Maguay, one of the biggest server and storage suppliers in Europe

Romanian Blockchain company Swazm has signed a partnership with Maguay, one of the biggest server and storage suppliers in Europe. The objective of the partnership is to expand the Swazm blockchain network by u

 Read Full article »
Deloitte research: Learning, employee experience and leadership, the main topics on human capital agenda in Romania

Continuous learning for skills development, leadership development and improving the employee experience are the most important and urgent among the trends identified by Deloitte 2019 Global Human Capital Trend

 Read Full article »
Oracle: Shifting toward a whole-enterprise cloud

Cloud technology and its adoption have been transformative for nearly every business, industry, and product. From running applications that are always-on and available, to limitless infrastructure scalability,

 Read Full article »
CBRE takes charge of the operations of NEPI Rockcastle's office portfolio in Bucharest

CBRE, the world and local market leader in real estate consultancy, was mandated with the property management of NEPI Rockcastle's office portfolio in Bucharest, consisting of three emblematical buildings: Flo

 Read Full article »
KPMG launches an application enabling real-time feedback of employees and managers

KPMG launches an application enabling real-time feedback of employees and managers

 Read Full article »
ABSL GALA AWARDS celebrated its winners last evening at Bucharest

As the voice of the business services, ABSL has created the ABSL Awards with the purpose of recognizing the most innovative, impactful and valuable projects and initiatives of the business services industry ove

 Read Full article »
Medium-sized companies relocate from class B to class A-offices in Timisoara

The office market in Timisoara witnesses a new trend: the relocation of companies from class B spaces to class A and the increase in attractiveness of modern office projects for firms with less than 50 employee

 Read Full article »
PropTech Romania organizes a hackathon in Bucharest, dedicated to real estate industry

Proptech Romania, the first Romanian innovation platform dedicated to the real estate market announced it is organizing the first European Real Estate Hackathon, in Bucharest, on the 12-13 April, an event that

 Read Full article »
AROBS Transilvania Software acquires HR software provider UCMS Group Romania

AROBS Transilvania Software, a specialized provider of outsourced business solutions based in Romania, is to acquire human resources management business, UCMS Romania from TMF Group, on DATE, subject to regulat

 Read Full article »
 
 
 
MOST READ ARTICLES
» Huawei opens a centre on cyber securit...
» ROMANIAN OUTSOURCING AWARDS FOR EXCELL...
» Romania ranks above EU average in gend...
» Bucharest, in the top of cities in Eur...
» Meet the experts who will decide the w...
» Berg Software Romania: Reasons to outs...
» KPMG launches an application enabling ...
» Bogdan Pelinescu, president of ABSL: A...
» ABSL GALA AWARDS celebrated its winner...
» George Rotariu, CEO Bitcoin Romania: B...
 
EDITOR CHOICE
Catalina Dodu - Meet the speakers at Romanian Business Services Forum 2019 CEO LEADERS DEBATE, on May 7

Catalina Dodu runs the operations of Atos Romania since March 2014, with an experience of over 15 years in IT management. Previous to being appointed Country Manager, Catalina managed the System Integration div

 Read Full article »
Philippe Beucher: Meet the speakers at Romanian Business Services Forum 2019 CEO LEADERS DEBATE, on May 7

Philippe Beucher is the Managing Director of Accenture Operations – Danubia Region, leading the Operations entity for Romania, Czech Republic, Slovakia and Hungary starting from February 2019. For the past 1

 Read Full article »
Meet the speakers at Romanian Business Services Forum 2019 CEO LEADERS DEBATE, on May 7th - Matthieu Pasquier

Matthieu Pasquier is CEO of Societe Generale European Business Services since August 2018 bringing more than 27 years experience in Societe Generale group. During 2014-2018, Matthieu was Head of SG GSC Chennai

 Read Full article »
Sorin Mindrutescu among the speakers at Romanian Business Services Forum 2019 CEO LEADERS DEBATE, on May 7th

Sorin Mindrutescu is the Country Leader for Oracle Romania, as of February 2003. In this role, he is responsible for local sales and project delivery. In Romania, Oracle has two major business directions: the l

 Read Full article »
Meet the speakers at Romanian Business Services Forum 2019 CEO LEADERS DEBATE, on May 7th - Vivek Bakshi

Vivek Bakshi is the General Manager of Wipro Technologies. He has spent 12 years heading the International Locations / Delivery Centers Europe from the Bucharest office.

 Read Full article »
Latest News  
 
about us | newsletter | contact | members area | GDPR policy
Copyright © 2015 by Diplomat Media Events Design by Diplomat Media Events