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IT and BPS to ensure most of the Romanian office market growth in 2016

With vacancy rates of 13% compared with the CEE capitals' average of 14.5%, Bucharest remains an attractive destination for investors looking for a better return for their money.

2015-12-11 11:38:10

The stable economy, with a perspective for 4.2% GDP growth in 2015, and the steady line of IT&C and BPO/SSC companies continuing to open branches in the country provide confidence that the good times will most likely continue in the coming year, according to Property Xpress.

During the third quarter of 2015, the newly built speculative space continued to increase while demand was rather constant, which led to some pressure regarding the rental levels. Prime monthly rents for Bucharest's CBD are in the range of 18-18.50 euro /square meters (sqm) and 11-12 euro/ sqm for the capital's periphery. In the countryside, the levels vary depending on the location, but are between 10-12 euro/ sqm for A-class office space in the main secondary markets.

The main driver of the new demand is the IT&C sector, accounting for 45% in Bucharest and nearly 70% in the secondary cities.

Currently, the Bucharest office stock exceeds 2.3 million sqm. Six new projects, totaling GLA 152,000 sq. m, are expected to be delivered by the year's end. Six new projects in Bucharest as well as two in Timisoara, one in Brasov and one in Iasi were launched in Q3.

Yields remained stable with a slight decline during the period. For Bucharest's CBD they float around 7.5%, while for the secondary markets they were in the 9-9.75% range.

Due to the growing investor interest, some yield compression is expected to occur, but it most likely won't deter the companies and individuals looking to increase their return, especially bearing in mind the 200 – 300 basis points yield gap between Bucharest and other CEE capitals like Warsaw, Prague and Budapest.


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