Land Market

Demand

The Romanian land market navigated in 2024 a complex economic landscape characterized by significant uncertainty. Initial market expectations were cautious, primarily due to impending elections and fluctuating economic indicators related to interest rates and inflation. Despite these challenges, the market demonstrated resilience, maintaining a transaction volume of close to €450 million (broadly comparable to 2023) largely through strategic deals initiated in previous years, as interest in new deals was diminished compared to previous years. We need to acknowledge that it is somewhat difficult to get a very clear grasp of where the market lies, as some transactions involve more complex factors, including settling JVs between the potential buyers/developers and the owners or land part of package deals which included income producing assets.

Otherwise, the market attracted a diverse range of investors across multiple sectors, including residential, retail, hospitality, medical, industrial, energy, and agri-business. Bucharest and its metropolitan area remained the primary transaction hub, accounting for 80% of total volume, with residential projects comprising 70% of these transactions. This represents a slight shift from previous years, where Bucharest’s share in overall dealmaking was somewhat smaller.

Strategic land platforms like Preciziei, Progresului, and Sisesti became focal points of investment interest. Additional areas such as Pipera, Corbeanca, Buftea, and Snagov experienced significant activity, particularly for land with existing construction authorizations that could facilitate faster project implementations.

Retail transactions contributed 20% to the overall market volume, featuring the closure of some long-pending deals like Helitube and Filan. Retailers demonstrated strategic behavior by consolidating and extending their presence in established areas. The office sector showed continued dynamism through notable transactions, including One United’s Romaero auction acquisition and strategic land purchases targeting future office developments within large scale mixed-use schemes.

In other parts of the country, residential grew as a share of total, after in 2023, it was broadly equal to retail deals (50%-50%). In 2024, we estimate that land purchases aimed at residential made up around 70% of total, with significant focus on major areas like Timisoara, Brasov, Constanta – including the wider sea-side area.

After many years of major retail acquisitions, developers have likely amassed a healthy land bank for future projects are now rather focused on those. Still there was new interest for land aimed at retail parks or shopping galleries around food anchors.

Local investors continue to make up the lion’s share of land acquisitions, particularly given how residential developers tend to be, in the majority of cases, backed by local capital.

Another interesting point is the growing trend of consolidations, meaning a developer with an ongoing project that tries to purchase land around that location for future expansions. Such deals tend to focus on whether or not the land has authorizations, as the buyers close such deals with a strategic longer-term view in mind.

Supply

Land supply continued to expand, driven by motivated sellers seeking to optimize their real estate portfolios. Active investors demonstrated a focused approach, divesting non-core land assets and targeting specific market segments. Properties that had been long-standing auction candidates found resolution, indicating increased market liquidity.

The metropolitan area’s supply landscape evolved significantly, with heightened interest around the A0 highway nodes around Bucharest. This interest was not limited to industrial developments but extended to residential and mixed-use projects, reflecting the market’s adaptability and forward-looking perspective.

Transactions and Prices

The most substantial transaction of the year was the Roca Preciziei / HILS deal, involving 12 hectares and valued at approximately €24 million. Other significant transactions included the acquisition of the former Muntenia factory by Israeli developer Dimri, as well as various other deals from CPI’s land portfolio.

Sellers exhibited increased payment flexibility, introducing innovative structures such as long-term, staggered, and infrequent installment options. This approach demonstrated a nuanced understanding of market dynamics and investors’ financial considerations, as well as the somewhat more challenging backdrop than in previous years.

Price trends revealed a segmented market. Strategic land plots, particularly those with approved urban planning and construction permits (PUZ/AC), maintained or even grew in value. Conversely, other market segments (those with no authorizations/in less desirable areas) showed more pronounced price adjustments, with some transactions closing even 30-40% below prices from a few years prior.

Forecast

The market’s near-term trajectory is closely tied to the upcoming presidential elections and the subsequent governmental stability. Romania’s robust consumption potential continues to attract new market players, suggesting underlying economic confidence.

Several transactions postponed due to recent political-administrative complexities are expected to close in the first part of 2025, potentially providing momentum for the year ahead. Market participants demonstrate patience, with most landowners being well-capitalized and strategically positioned to await optimal selling conditions.

While some investment plans may temporarily pause pending political clarification, investors - especially local players - maintain a strong conviction in Romania’s medium and long-term real estate potential. This is evidenced by continued efforts to secure strategic assets and a proactive approach to market opportunities. Consequently, barring any major negative surprise, we would expect that “business as usual” will be more or less valid for the land market going forward in 2025 as well.