Real Estate: Foreign direct investments in construction and real estate increase threefold in past ten years 

Foreign direct investments in construction and real estate increased more than threefold in absolute value over the period 2014-2024, rising by 15.1 billion euro and reaching 21.6 billion euro at the end of last year, so that the share of this sector in the total stock rose from 10.6% to 17.3%, indicates an analysis by the real-estate consulting firm Cushman & Wakefield Echinox, released on Wednesday.Analysing data from the National Bank of Romania, the company's specialists show that the flow of foreign capital contributed to the growth of the stock of modern real estate spaces (offices, retail, and industrial & logistics) from approximately 5 million square metres in 2014 to around 17 million square metres at the end of 2024, about 70% of which is owned by investors outside Romania.The stock of foreign direct investments reached 125 billion euro in 2024, and the real estate and construction sector was last year one of the main beneficiaries of the net flow of foreign capital, with an increase of 651 million euro versus the previous year. This development was driven primarily by the resumption of intra-group lending and the reduction in flows related to debt instruments, according to data from the Central Bank.From the viewpoint of distribution across economic activities, 86.6% of the total net stock of foreign investments is concentrated in four sectors, namely industry (37.1%), construction and real estate transactions (17.3%), commerce (17.2%) and financial intermediation & insurance (14%).In the interval 2014-2024, the four sectors that hold the majority share in the total net stock of foreign direct investments exhibited differing growth rates. Thus, while industry recorded only a 54.4% growth compared to 2014 levels (+16.3 billion euro), in commerce (+14.8 billion euro) plus construction and real estate transactions (+15.1 billion euro) there were tripling of stocks, and in financial intermediation & insurance a growth of 123% (+9.6 billion euro).These evolutions led to a decrease in the share of investments in industry in the total net stock from 48.4% in 2014 to only 37.1% in 2024 (-11.3 percentage points), in favour of investments in construction & real estate transactions (an increase of 6.7 percentage points, from 10.6% to 17.3%) and in commerce (an increase of 6.4 percentage points, from 10.8% to 17.2%), the analysis reveals.Furthermore, in terms of the allocation of the stock of foreign direct investments in greenfield enterprises across the main economic activities, the construction and real estate sector ranks at the top, with 18.2% of the stock, after manufacturing (26.9% of the stock of foreign direct investments in greenfield enterprises) and commerce (23%).'The real estate and construction sector continues to be one of the most stable and attractive industries for foreign investors, even in an economic and geopolitical context marked by uncertainty. The positive trend of foreign capital flow and the high share of greenfield investments demonstrate investors' confidence in the potential of the Romanian market and its ability to generate competitive long-term returns. At present, yields for prime assets in Romania are 1-2 percentage points higher than benchmark values in most Central and Eastern European countries, which represents a competitive advantage for investors in the real estate sector,' Head of Valuation & Consulting at Cushman & Wakefield Echinox Bogdan Sergentu is quoted in the release as saying.In 2024, the net flow of foreign direct investments attracted by Romania was 5.6 billion euro, down 17% compared to the previous year, against a backdrop of global uncertainties and internal vulnerabilities, such as modest economic growth, a deepening budget deficit, and a politically complex electoral climate.Cushman & Wakefield Echinox is a real estate consulting company in the local market and the exclusive affiliate of Cushman & Wakefield in Romania, owned and operated independently. Cushman & Wakefield is one of the global leaders in commercial real estate services, with 52,000 employees across 400 offices in 60 countries. With revenues of $9.4 billion, the company's main services are: asset and investment management consulting, capital markets, leasing, property management, tenant representation, project services and valuation.