By rbj
The market for land transactions intended exclusively for residential and commercial projects (offices, retail, hotel) last year recorded the highest value from 2007 to date. The total volume of transactions has increased more than two and a half times compared to the estimated volume of 310 million euros in 2020, according to Colliers data. Retailers and residential developers have been extremely active, with land for such projects accounting for about 90% of the total.
The capital remained at the top with three-quarters of the nominal volume of transactions, ie a value of over 600 million euros. About 70% of transactions in Bucharest are for residential projects, Colliers consultants estimate, explaining that there are many large transactions with mixed projects where the share allocated by developers to various sectors is not established with certainty. For comparison, in 2007 in the Capital alone there were transactions of over 800 million euros, and at the national level, the threshold of 1 billion euros was exceeded, according to estimates from that period.
The planets have aligned in 2021 and, thanks to several “ingredients”, the market has doubled compared to 2019 and reached unprecedented levels since the previous boom in 2006-2008. 2021 proves to be a record year because there was a good interest in land, supported by adequate liquidity, the current economic context, with very high inflation, increasing the attractiveness of real estate investments. The pipeline of important transactions started in 2019 and 2020 also contributed significantly, which were more difficult in the context of the pandemic “, explains Sînziana Oprea, director of the Land Agency at Colliers.
Outside the Capital, Colliers consultants noticed an increased interest of developers for a number of large cities, such as Timisoara, Brasov, Constanta, Cluj-Napoca, Craiova, Galati, Braila, Oradea, Sibiu, but also for certain cities with a population smaller, such as Vaslui, Tulcea, Giurgiu or Călărași.
At the same time, the number of large transactions increased significantly (by over 5 million euros), including in cities outside Bucharest, and Colliers consultants also point out that there were transactions at values rarely seen after 2008. For example, for a plot of land in the Spring area, the developer Hagag paid almost 6,000 euros per square meter, approaching the absolute record on the local market in Romania, when a plot of land in the Aviatorilor area sold for about 7,000 euros per square meter a decade and a half ago. On average, prices remain slightly below 2007-2008, but Colliers representatives also point out that fundamental market data has changed completely: for example, in the last 15 years, the purchasing power of the average salary in Bucharest (adjusted for inflation) is close. it tripled.
At the same time, the generous supply of land, to which is added the fact that future development margins will be pressured by the rise in the price of construction materials, has limited the increase in land prices to an average of 10-15%. Exceptionally, there have been more substantial price increases for very good and urbanized land in Bucharest, where there has been increased competition between several interested developers.
“The prospects for 2022 are good, but slightly more reserved. After a year or two, it would take some time for the market to absorb future real estate projects, especially in the residential sector. Moreover, in Bucharest and in other areas of the country, there are some blockages or delays in the area of building permits, aspects that can lengthen the entire process of procurement and delivery of projects. Therefore, we expect a significant trading volume, but below the level of 2021, and a quasi-stagnation of prices, with the mention that exceptional land in position, but also with approved urban planning documents, can attract better offers. We expect that in 2022 investors will also focus on infrastructure developments because the first signs support such an argument. We already see an increased interest for the lands in the area of the A0 Motorway, but also for those that could benefit from the extension of the Berceni metro ”, concludes Sînziana Oprea, director of the Land Agency at Colliers.
