The volume of land transactions dedicated exclusively to residential and commercial projects (offices, shops, hotel) experienced last year its highest value since 2007. The market has multiplied by more than two and a half compared to the estimated volume. of 310 million euros in 2020, according to data from Colliers. Retailers and residential developers have been extremely active, with land for such projects accounting for around 90% of the total.
La Capitale still has the lion’s share of transactions, with three quarters of the nominal transaction volume, representing more than 600 million euros. Around 70% of transactions in Bucharest concern residential projects, believe the Colliers consultants, explaining that there are many transactions with large platforms for mixed-use projects where the share allocated by developers to different sectors does not is not completely sure. By way of comparison, in 2007, the Capital alone recorded transactions of more than 800 million euros, and at the national level, the threshold of one billion euros was exceeded, according to estimates at the time.
“The planets aligned in 2021 and, thanks to several elements, the market has doubled from 2019 and reached levels that we have not seen since the boom of 2006-2008. 2021 turned out to be a year of “exceptional harvest” because there was good interest in land, thanks to the adequate liquidity as well as the current economic context, the high inflation increasing the attractiveness of real estate investments. In addition, the large pipeline of transactions started in 2019 and 2020 also contributed significantly to this volume, as some took longer to close due to the pandemic ”, explains Sînziana Oprea, director of the Land Agency. at Colliers.
Outside the capital, Colliers’ consultants noticed an increased interest from developers for a number of large cities, such as Timisoara, Brasov, Constanta, Cluj-Napoca, Craiova, Galati, Braila, Oradea, Sibiu, but also for some smaller towns, such as Vaslui, Tulcea, Giurgiu or Călărași.
At the same time, there has been a significant increase in the number of large transactions (over 5 million euros), including outside Bucharest, and Colliers’ consultants also point out that 2021 also saw some rarely seen values. after 2008. For example, for a piece of land in the Primaverii neighborhood, the developer Hagag paid nearly 6,000 euros per square meter, approaching the absolute record of the land market in Romania, consisting of land in the Aviatorilor neighborhood sold for around 7,000 euros per square meter a decade and a half ago. On average, prices remain a little below the levels seen in 2007-2008, but experts at Colliers note that the market fundamentals are also completely different: for example, over the past 15 years, the purchasing power of the average employee in Bucharest (adjusted CPI) almost tripled.
The generous supply of land, together with the fact that future development margins will be under pressure by rising prices for building materials, have limited the rise in land prices to an average of 10-15%. In some cases we have seen more substantial price increases, but only for very good urbanized land in Bucharest, where competition has increased between several interested developers.
“The outlook for 2022 is good, but a little more subdued. After a year as active as two normal years, it will take time for the market to absorb the pipeline of real estate projects, especially in the residential sector. In addition, in Bucharest and other regions of the country there are blockages or delays in the authorization process which can lengthen the entire process of procurement and delivery of projects. Therefore, we expect a significant market volume for 2022, albeit lower than the 2021 level, and near stagnation in prices, although exceptional land well placed and benefiting from approved planning documents may attract better offers. . We expect that in 2022, investors will start to focus on new areas with ongoing infrastructure developments, as the first signs support such an argument. We are already seeing increased interest in plots in the A0 motorway zone, but also in those that could benefit from the extension of the Berceni metro, ”concludes Sînziana Oprea, director of the Land Agency in Colliers.