Real Estate: Interest in local land market remains high

The land market remained very active in Romania in the first half of 2023, with an estimated turnover of around 250 million euros, a volume that only includes land transactions for commercial real estate projects in sectors such as the residential, office, retail ones, without taking into account segments such as the industrial or energy ones, shows Colliers in its market report on the evolution of the real estate market in the first half of this year.The retail segment is enjoying the most attention as developers continue to see opportunities in many areas of the country. As the summer period has been fairly quiet so far, Colliers consultants expect modest transaction volumes in the coming quarters.In terms of demand, it has been almost evenly split between the retail and residential segments. However, while retail developers remained quite active, focusing mainly on retail/big box stores parks in areas/cities with limited stock of modern retail space, in the residential sector there has been a more pronounced slowdown in transactions, as higher interest rates and rising construction costs have led to a fairly significant decline in activity, especially compared to the 2020-2022 period.In Bucharest, the adjustment of the supply of new dwellings amid lower demand was evidenced in the first quarter of the year by a sharper decline in the number of dwellings delivered. Only 4,666 dwellings were delivered in the first three months of 2023, down 16% compared to the same period last year.The evolution of the residential market is closely linked to the general evolution of the economy, and the good outlook for the Romanian economy was highlighted in the European Commission's latest forecast this spring. Despite the slowdown in economic growth in the European Union compared to 2022, Romania is the country with the highest projected economic growth in the EEC and the third highest in the EU, with 3.2% in 2023 and 3.5% in 2024. These prospects contribute to the positive investment climate, together with the second lowest inflation in the CEE-6 and the level of public investment in infrastructure.