The banking sector’s exposure to the commercial real estate market (CRE) (excluding the residential segment) exceeded RON 100 billion in September 2024, accounting for half of its total exposure to non-financial corporations. This increase, driven by the use of commercial real estate properties as collateral, highlights the sector’s crucial role in supporting Romania’s economy, according to data from the Cushman & Wakefield Echinox consultancy company based on reports issued by the National Bank of Romania (BNR). Nearly 60% of these loans are secured by real estate assets, while the remaining share represents direct exposure to companies in the sector. Direct bank exposure increased by 10% in 2024, compared with a 6% rise in indirect exposure. Romania’s banking sector exposure to construction and real estate companies stands at 21%, one of the lowest in both Europe and Central and Eastern Europe. In comparison, the exposure levels in the Czech Republic (35%), Poland (24%) and Hungary (22%) are notably higher, while Nordic countries such as Sweden (62%), Norway (49%) and Denmark (47%) show significantly greater exposure. On the other hand, South European nations, including Greece (10%), Malta (14%) and Italy (15%) report considerably lower exposure levels. Vlad Saftoiu, Head of Research at Cushman & Wakefield Echinox: “With a banking exposure of just 21% in construction and real estate, Romania benefits from a good balance between prudence and opportunity on this highly important economic sector. This exposure, among the lowest in Europe, suggests a significant potential for growth and development, offering room for investments and innovation in the real estate market without overburdening the banking system. The steady increase in lending within this sector illustrates growing confidence and a strong appetite for commercial properties, promising a dynamic future for Romania’s real estate market.” Even though the quality of the CRE loan portfolio is still lower than the one pertaining to the aggregate total of loans given to non-financial corporations, it has seen relevant improvements in the last few years. Therefore, the ratio of non-performing loans related to construction and real estate companies was of 4.3% in September 2024 (-0.1 percentage points vs. September 2023 and -4.5 percentage points vs. September 2019), while the one for loans secured by real estate collateral (other than those granted to companies operating in the construction and real estate sectors) dropped to 4.9% in September 2024 from 6.1% a year before. The vast majority of CRE loans (86%) have a debt service coverage ratio above 2, which shows that the companies which took these loans have the capacity to cover at least twice the annual debt service payments. According to the latest assessments of the vulnerabilities related to the commercial real estate sector in Romania, risks remain manageable and the trend is constantly improving, taking into account the signs of recovery in the commercial real estate market. The construction and real estate sectors play a crucial role in the overall financial stability due to their size and interconnections with both the financial system and the broader economy. The gross value added in construction and real estate had a 15.3% share in the GDP (Q2 2024), illustrating an increase compared with 2 years beforehand (13.8% in Q2 2022), thus pointing to the relevance of these sectors in regards to financial and economic stability, but also to a substantial spillover risk to the real economy. Moreover, the construction and real estate activity Romania was above both the EU average (14.9% share in the GDP in Q2 2024) and also the levels recorded in some of the peer economies in the region (Bulgaria – 10.8%, Poland – 11.2%). Companies active in construction and real estate account for 15% of total non-financial corporations (~126.000 in 2023) in Romania, employ 12% of the national workforce (~486.000) and hold 20% of the assets related to non-financial corporations. Construction and real estate companies have a higher level of indebtedness compared with the average for the entire non-financial sector, but the overall trend has been downward over the past few years. Thus, the level of indebtedness (debt-to-equity ratio) was of 181.7% in 2023 (as compared with 158.2% for all non-financial corporations), down from 210.6% in 2022.
The Board of Directors proposes a gross dividend of RON 0.11/share, with a 7.64% yield. RON 97.8 million is the estimated fund allocated to dividends in 2024. The own share buyback operation is within 4.46% of the share capital. The net result of RON 263.66 million increased by 29.4% compared to 2023. The value of […]
DIY retailer Dedeman has acquired approximately 6 hectares of land near the Giurgiu customs, at the border with Bulgaria. The transaction, brokered by real estate consultancy Colliers, brings Dedeman to the last county in Romania where it had no stores, allowing it to expand its network further. Dedeman, controlled by entrepreneurs Adrian and Dragoş Pavăl, […]
Dulcinella, a Romanian network of confectionery and pastry shops with Bessarabian roots, aims to increase the number of locations by 80%, from 20 to 100, by the end of 2026. Of these, 80% will be created through franchising or operation, two types of partnerships defining Dulcinella Group's strategy in the coming years, it said. By […]
Romanian Cosmin Crăciun drove approximately 26,000 kilometers from Buzău, southern Romania, to Yakutsk, Russia, the coldest city in the world, using his personal car. His journey took 53 days roundtrip. Crăciun began his expedition in January of this year, traveling through Turkey, the Caucasus Mountains, and Kazakhstan before reaching the first destination on his itinerary, Lake […]
Rubik Hub is refocusing this year’s edition of its international scaling accelerator, Rubik Scale, from the US to the UK. The organization has opened two spots for seed-stage startups that aim to expand in the UK. Applications are open until April 10 on the official website. “Just like startups, we need to keep a close […]
Jason Derulo, the international music star known for hits like “Wiggle” and “Talk Dirty,” is set to make his debut in Romania at the FOMO – Festival Of Modern Owners. However, he’s not performing this time but sharing his entrepreneurial insights as a speaker. At the event in Romania, the music superstar, who has sold […]
