City Report

Q1 2017
 4.8% 0.61% 5.3%

Unemployment rate
GDP Growth Inflation April March 2017
2016 2017 y-o-y

€6,288 7.4% 6.7%

Purchasing Power 2016, Retail Sales, Industrial production,

Bucharest Q1 2017 y-o-y Q1 2017 y-o-y

Investment Market
The property investment volume in the first quarter of 2017 is estimated at approximately €145 million, a small decrease when compared to the rather strong Q1
2016, when transactions of approximately €180 million were concluded. The first three months of the year, however, witnessed a significant number of direct
transactions rather than share ,as was the case in Q1 2016.

Bucharest accounted for close to 30% of the total investment volume. Market volumes were dominated by Industrial transactions (close to 48%), followed by
retail (41%) while office accounted for close to 11%.

The largest deal of the quarter was the acquisition of the Dacia-Renault Warehouse in Oarja, 15 kilometers from Pitesti, on the A1 Highway, by Globalworth, from
the company owned by local entrepreneur - Simon Roth. This is the second industrial asset of the AIM listed fund in Romania, which is the largest office owner in
the country, after the one acquired in 2014 in Timisoara.

In retail, the largest transaction was the sale of Felicia Iasi, the last standing asset of CBRE GI in Romania, to CPI, as part of a Pan-European portfolio transaction.
The largest office transaction was the acquisition of Polona 68 by Topmost Invest, the same group that acquired Swan Office Park in 2016 from EEC Invest for
approximately €17 million.

Despite the favorable macroeconomic environment, there is still a major pricing gap between Romania and the main CEE markets, with prime yield levels at
around 150 - 200 basis points higher than those in Prague and Warsaw. Prime Industrial yields decreased by 25 bps over the quarter to 8.75%. Prime office yields
are at 7.50% and retail yields are at 7.25%, remaining stable over the quarter. However, yields are still at a mid-level between the last peak and last trough.

Prospects for 2017 are positive given the projected economic growth of the country, one of the highest in Europe and the still significant yield spread between
Romania and Poland or the Czech Republic. Volumes are estimated at around €800 million.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
Prime Yields

7.25% 7.5% 8.75%

Shopping Centre Office Industrial

Romanian Investment Volumes

2500

2000

1500

1000

500

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F

Office Retail Industrial Mixed Residential Hotels

Key Investment Transactions in Q1 2017

Sector Property Market Est. Price (€ million) Seller Buyer

Industrial Dacia Renault Warehouse Oarja Pitesti 42 Local Globalworth

Retail Flicia Iasi Iasi 29 CBRE GI CPI
Office Polona 68 Bucharest 17 EEC Invest Topmost Invest
Retail 4 Real Hypermarkets Romania 15 Metro Group Terrazone
Retail Armonia Braila Braila 14.8 Volksbank Geelan Impex
Industrial Millenium Logistic Park Bucharest 14.2 Alpha Bank Helios Phoenix
Industrial Phoenix Logistic Center Bucharest 10 Lonestar CTP

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
Evolution of Gross Take-up (sq m) by Sub-market, 2009-2017F

400,000

350,000
CBD
300,000
Others
250,000 Baneasa

200,000 West + Center West

Pipera North
150,000
Dimitrie Pompeiu
100,000 Floreasca Barbu Vacarescu

50,000 Center North

0
2009 2010 2011 2012 2013 2014 2015 2016 2017F

Bucharest Office Sub-markets

Sub-market Stock (sq m) Vacancy Rate (%)

1. CBD 242,122 12.1

2. Centre – North 143,241 10.1
3. Floreasca – BV 411,825 9.3

4. Dimitrie Pompeiu 258,567 7.3

5. Centre – West 188,170 7.5
6. West 146,900 7.5
7. Centre 160,466 12.6
8. East 84,500 8.6
9. South 62,303 47.8
10. North 314,962 8.5
11. Baneasa 96,500 27.8
12. Pipera North 191,600 27.1
TOTAL 2,401,156 12.3
*The updated stock include buildings Class A&B, built after 2000

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
Evolution of Headline Rents by Location

30

25

20

15

10

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F

CBD Semi-central Peripheral

Completions and Pipeline 2017 Key Leasing Transactions in Q1 2017

Contract Deal Size

Property Submarket Size (sq m) Quarter Property Occupier
Type (sq m)

North Gate Renault Renewal 20,000

Aviatorilor 8 CBD 7,200 Q1
Sky Tower Oracle Renewal 10,300

Dorobanti 33A Center North 2,800 Q1 City Gate Rompetrol Renewal 10,000

Timpuri Noi Square South 33,000 Q2 Globalworth Tower Huawei New lease 6,700

PC Center II CASA DE ASIGURARI Relocation 5,609

The Bridge ph. 1 Center West 36,200 Q3 DE SANATATE A
MUNICIPIULUI
BUCURESTI
Dimitrie
Globalworth Campus ph. 1 29,000 Q3 Iride P&G Renewal 5,600
Pompeiu

Sema Park 4 Center West 28,000 Q3 The Landmark Confidential New lease 4,506

West Gate Societe Generale New lease 4,000

BASP Victoria Office North 7,000 Q3
Hermes Business
Campus Genpact New lease 3,250

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
 Retail Projects in the Bucharest by Size

8%

34%
22%

Total Stock
1,104,000 sq m

35%

Small (5,000 - 19,999 sq m) Medium (20,000 - 39,999 sq m) Large (40,000 - 59,999 sq m) Very Large (>60,000 sq m)

Shopping Centre Density (sq m) Under Construction – Romania (sq m)

per 1,000 Inhabitants* to be completed in 2017-2018*

700
2017 2018
600

500

400

300

200

100
139,300 202,200
0

*Including all retail formats

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
 Schemes Announced for 2017 – 2018 in Romania (>10,000 sq m)

Property Format Developer Size (sq m)

AFI Palace Brasov Shopping Center AFI Europe 45,000

Festival Shopping Center Shopping Center Primavera Development 42,000

Promenada Mall Extension NEPI 34,000

ERA Park Iasi Extension Argo 30,000

Shopping City Satu Mare Shopping Center NEPI 28,700

Ramnicu Valcea Mall Shopping Center NEPI 28,000

Shopping City Galati Extension NEPI 21,000

Platinia Cluj Mixed-use Development Drusal Construct 13,000

Sun Plaza Extension S Immo 11,000

Sibiu Shopping City Extension NEPI 11,000

Largest Owners of Retail Space in Romania Prime rents (€/sq m/month)

NEPI
21%
65 - 75 9 – 9.5 50 - 55

Total Stock Iulius Group

8% Shopping centres Retail Parks High street
3,031,000 sq m
*Prime rents relate to a well located 100 sq m unit shop from the fashion and
accessories category in leading retail assets in capital city (for retail parks – 2,000 sq
Immofinanz m units).
5%
Others
66%

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
 Deliveries in Q1 in Romania:

West & North-West

Completions: 0 sq m East
Completions: 0 sq m

Center
Completions: 0 sq m

South
Completions: 0 sq m

South-West South – East

Completions: 0 sq m Completions: 0 sq m

Bucharest & Ilfov County

Completions: 27,000 sq m

Total Stock Evolution - Romania (sq m) Demand in Q1 2017

3,000,000

2,500,000

2,000,000

1,500,000
175,300 sq m

1,000,000

500,000

0
2011 2012 2013 2014 2015 2016 2017F
Net take-up (sq m)

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
Net take-up by Sector in Q1 2017

Other
16%

Logistics
39%
Production
14% 175,300 sq m

Retail
31%

Key Transactions in Q1 2017 Pipeline 2017 (Selection)

Tenant Property Size Deal Sector Project Location Size (sq m) Type
(sq m) Type

NOD CTPark Bucharest West 30,954 New lease Logistics

CTPark Bucharest West Bucharest 68,000 Extension

Built to
Profi WDP Roman 27,000 Retail
suit P3 Logistics Park Bucharest 60,000 Extension

Altex P3 15,000 New lease Retail

WDP Otopeni Bucharest 38,000 New Project

Carrefour WDP 11,500 New lease Retail

CTPark Timisoara Timisoara 35,000 Extension

Confidential Confidential 10,500 New lease Confidential

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017 Bucharest City Report Q1 2017
Contacts
Andrei Drosu
Senior Research Consultant
Capital Markets
+4 0745 930 934
andrei.drosu@eu.jll.com

jll.ro

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