Colliers managed to consolidate its leading position on the land market even after the real estate boom. Based on their increased activity on a market that continues to be a tough one, the company’s Land Agency team grew in the past years and currently comprises 4 consultants under the coordination of Mihai Bogza andSinziana Oprea.
„There was a lot of noise on the market in terms of prospecting activity in the past years. However, the transacted volume remained subdued, due to both lower number of transactions but also reduced deal sizes. After 2008, the players on the market switched their behavior. If before 2008 they were continuously buying land plots, in the last five years they alternated procurement with development periods. As 2011 and 2012 were two relatively good performing years in terms of transactional activity, starting with 2013 many of the players entered the development period“, statesSinziana Oprea, Senior Associate in the Land Agency of Colliers International.
The main sources of the €100 mln. transactional activity mediated by Colliers between 2011 - 2013 were represented by retail (70% of the total transactional volume), office (25%) and, to a lesser extent, by residential land transactions (5%). Major transactions assisted by Colliers Land Agency in the analyzed period are Benevo Capital’s acquisition of Vulcan platform, Nepi’s acquisition of the 13 ha plot where Shopping City Galati has been recently delivered, but also the sale of 3 strategic land plots in the fast developing Floreasca – Barbu Vacarescu area in Bucharest, all currently in an advanced development phase. Other clients Colliers International assisted in the acquisition process in the analyzed period are Dedeman, Interprime Properties, Intercora or Rewe Group.
The average transaction volume registered a slight reduction in the past years, with more and more transactions closing below the € 3 mln. level. If in 2012 the market recorded 3 deals over €20 mn each, in 2013 there was only 1 transaction exceeding the €15 mn level: Benevo Capital secured Aversa factory (10 ha) in Obor Square in Bucharest for €17.3 mn, provided that the factory’s operations are preserved for at least three more years. Consequently, the market was dominated by small and medium size deals, below €3 mln., closed by opportunistic investors and small retailers. The prices remained on the descending trend in 2013, given the increase in supply of attractive deals from banks, liquidators and distressed owners. According to the latest Market Report published by Colliers International, in 2013, the market recorded a 10-25% decrease in prices compared to 2012. However, there were also areas that preserved constant prices, such as central and exclusivist areas where the supply is limited and usually the owners do not have a pressure to sell.
As a general tendency set to increase in the following period, the land market – previously dominated by retailers and retail developers – now witnesses the comeback of several key-segments, such as office and large residential developers.
For 2014, estimations indicate that transactional activity will keep the same pace as in 2013. Most buyers will, however, continue to be rather opportunistic. While there are banks and land owners with pressure to sell, the market will offer good deals. As supply is expected to remain considerably higher in relation to demand, overall prices will be on a descending trend this year as well.
“2014 will offer good investment opportunities on the land market. Banks, among the most active land vendors in 2013, have become more aggressive in terms of pricing. Although many of them succeeded in attracting buyers and partially “cleaned” their portfolios, there are still opportunities left for investors. The positive macroeconomic outlook, the higher investment appetite of an increasing number of players, combined with a decreasing number of distressed assets available, will lead to price stabilization on the medium term (1-2 years)”,concludes Sinziana Oprea.
Similar to the previous years, the existence of a valid PUZ will weigh a lot in the buying decisions especially in case of the developers. They are very reluctant to acquire land which does not have yet a PUZ approved, as this implies a delay of around 1-1.5 years before the construction works start. Besides the risks associated with the obtainable building parameters, a project developed on such a land is associated with higher risks due to the uncertainties in relation to the market conditions at the time the future project is delivered and sold/leased (within 2 – 2.5 years on average from the land acquisition).
