Article published on Wall-street.ro on November 20th , 2016.
Perhaps the most important advantages that Romania has in to context of the European real estate market, in order to attract foreign investors, are represented by the market and location. There are also the advantages related to the resources and the high qualified labor force at competitive prices. Wall-street.ro talked on this subject with three of the most important European Property Federation (EPF) representatives: Liviu Tudor, Founder and President of the Romanian Association of Building Owners and Vice-president of the EPF, with John Frederiksen, President EPF and with Reinhold Lennebo, Chairman of the Managing Committee EPF.
Liviu Tudor (photo): A very good argument is that, at the moment, in Romania, the yield is around 7.5 percent, with a potential for compression to 7 percent in the coming years. Yields remain 150 to 200 basis points higher than in other CEE countries. Compared to other CEE cities, for example Warsaw and Budapest, Bucharest offers attractive yields-prime office yields are around 7.5 percent in Bucharest, 6 percent in Warsaw and 7 percent in Budapest.
In regards to shopping centres, yields are at around 7.75 percent in Bucharest, 7 percent in Budapest and 5.5 percent in Warsaw, while those on logistics and industrial properties are about 9.25 percent in Burcharest, 8.75 percent in Budapest and 6.75 percent in Warsaw.
Therefore, the increased investment profitability which Romania recorded in comparison with the countries of the region is an important element to attract investments. Furthermore, Romania could do more to attract foreign investments by increasing legislative stability, especially in the area of taxation and finance.
John Frederiksen: A lot of things change within the European Union framework, changes which the Member States will have to adopt. From this point of view, membership of each EU countries at the European Property Federation will become significant, in order to debate aspects and changes related to the real estate market. If these are passed by the European Parliament and the European Commission, then it is too late to amend the legislation.
Furthermore, the EPF membership brings an exchange of know-how and inspiration between its members, whether they are real estate companies or organizations from the industry. If Romania is faced with a difficulty in the real estate market, such as the European legislation, EPF may represent a resource for borrowing best practices from other European countries that can be implemented locally. Why? Because the experience of each country on a particular case becomes relevant at Community level for the others.
Reinhold Lennebo: Of course there is a range of opinions on these issues. I can say that the main problem today in Europe, is the date of implementation, in many countries, of a national system for controlling rent in the residential segment. This type of control system affects the free movement of capital and people, and inhibits the growth of the residential market.
Thus, these systems and control mechanisms for renting represent a problem within the housing market. For example, in countries such as Sweden owners provide less and less apartments for rent which leaves fewer options for a person who comes from London or from Bucharest to find a convenient housing solution in Stockholm, whether they are relocating for work or studies.