Transcript presentation - Foreign Investors Summit 2015
Slide 1
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 2
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 3
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 4
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 5
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 6
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 7
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 8
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 9
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 10
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 11
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 12
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 13
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 14
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 15
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 16
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 17
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 18
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 19
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 20
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 21
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 22
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 23
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 24
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 2
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 3
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 4
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 5
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 6
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 7
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 8
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 9
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 10
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 11
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 12
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 13
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 14
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 15
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 16
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 17
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 18
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 19
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 20
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 21
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 22
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 23
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of
Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the
accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Slide 24
Romania Back in the Spotlight
General
2
Romania
• 2nd largest CEE country in terms of population, 3rd largest in terms of economy;
• Above average economic growth forecasts;
• Struggles with prejudices and legacy issues such as:
- Corruption (true, but improving and less than for example Greece and equal to Italy according to the
2013 Transparency International survey);
- Many property companies entered at the top of the market and got burned, things have moved on
since then and now one can enter at the bottom rather than at the peak of a market cycle;
- Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat,
GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average).
• No downside comes without an upside…..
3
Bucharest Office Market
Limited stock in absolute and relative terms, much of existing stock is furthermore of poor quality
5,000,000
3,000
4,500,000
3,500,000
2,000
m²
3,000,000
2,500,000
1,500
m² / 1,000 capita
2,500
4,000,000
2,000,000
1,000
1,500,000
1,000,000
500
500,000
0
0
Bucharest
Budapest
Absolute stock (LHS)
Prague
Warsaw
Stock per 1,000 capita (RHS)
4
Romanian Retail Market Opportunities
Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE,
but are expected to show strong growth, a disproportionate share of which will go to non-food items
10,000,000
300
9,000,000
250
8,000,000
200
6,000,000
5,000,000
150
4,000,000
m² / 1,00 capita
m²
7,000,000
100
3,000,000
2,000,000
50
1,000,000
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
5
Romanian Industrial Market Opportunities
Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location
Romania is ”the growth story” in CEE outside Poland
9,000,000
500
8,000,000
450
m²
350
6,000,000
300
5,000,000
250
4,000,000
m² / 1,000 capita
400
7,000,000
200
3,000,000
150
2,000,000
100
1,000,000
50
0
0
Romania
Hungary
Absolute stock (LHS)
Czech Republic
Poland
Stock per 1,000 capita (RHS)
6
A Window of Opportunity has Opened up…
7
Bucharest Office Market
Steady drop in availability fuelled by high occupier demand, resulting in stabilized headline rents and a
narrowing gap between effective rents and headline rents in 2014
300,000
17
250,000
16
14
m²
150,000
13
100,000
12
50,000
11
0
10
2010
2011
2012
2013
2014
€ / m² / month
15
200,000
2015F
Net take-up (LHS)
Net additions (LHS)
Class A semi-central headline rent (€ / m² / month) (RHS)
Class A semi-central net effective rent (€ / m² / month) (RHS)
8
Bucharest Retail Market
Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several
large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected
to retreat nevertheless as retail sales growth has picked up
160,000
14.00%
12.00%
140,000
10.00%
120,000
8.00%
6.00%
m²
100,000
4.00%
80,000
2.00%
60,000
0.00%
-2.00%
40,000
-4.00%
20,000
-6.00%
0
-8.00%
2010
2011
Net additions (LHS)
2012
Vacancy rate (RHS)
2013
2014F
2015F
Retail sales evolution (RHS)
9
Bucharest Industrial Market
Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as
existing stock fills up and there is no speculative supply and also the number of BTS developments
remains very limited due to strict contractual requirements imposed by developers
160,000
18.00%
140,000
16.00%
14.00%
120,000
12.00%
100,000
m²
10.00%
80,000
8.00%
60,000
6.00%
40,000
4.00%
20,000
2.00%
0
0.00%
2010
2011
Net additions (LHS)
2012
2013
Net take-up (LHS)
2014F
2015F
Vacancy rate (RHS)
10
Bucharest Investment Market
Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional
perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north
from where they were in 2007
11.50%
10.50%
9.50%
8.50%
7.50%
6.50%
5.50%
2007
2008
2009
2010
Bucharest Prime Office Yields
Bucharest Prime Retail Yields
Bucharest Prime Industrial Yields
2011
2012
2013
2014F
Warsaw Prime Office Yields
Warsaw Prime Retail Yields
Warsaw Prime Industrial Yields
11
Success Stories – Solid Demand Fundamentals
12
Office Sector (1/2)
Key source of demand are the new ”factories” of Romania: Already over 20,000 people are working in the BPO
and SSC sector with annual average growth over the last 3 years being 20%. Good IT skills, cheap costs per
workstation, tax incentives and the coverage by the US military umbrella fuel rapid expansion
Iasi
•
•
•
•
•
•
Cluj-Napoca
•
HP
•
Genpact
•
Evalueserve
•
Office Depot
•
Bombardier Solution
•
Emerson
•
E.ON
Amazon
Continental Automotive
NESS
XL World
XEROX
Unicredit
Brasov
•
Indesa Bank
•
CGS
•
Siemens IT Solutions
•
IBM CDG
•
DCI Database
•
Wind Technologies
Timisoara
•
HP
•
S&T
•
Wipro
•
Oracle
•
Bosch
•
Siemens
•
Alcatel Lucent
Craiova
•
Callity
•
Telus
•
UCMS
•
Call Point
Bucharest
•
HP
•
IBM
•
Oracle
•
Deutsche Bank
•
Microsoft
•
WNS Global Solution
•
•
•
•
•
•
Allianz
CGS
Societe Generale
Genpact
Ericson
Huawei
13
Office Sector (2/2)
Romania has the lowest cost per workstation in the EU. Low costs for qualified labor, good IT and power
infrastructure, best language skills and low real estate costs amongst others due to high density (limited m² per
workstation)
Romania
6-10 m²/p
NAM
16-23 m²/p
APAC
7-14 m²/p
EMEA
12-19 m²/p
LAT
9-16 m²/p
14
Strong Presence of International Retailers in Romania
17 out of the Top 20 most active international retailers in Europe are present in Romania
Zara
H&M
The Body Shop
Benetton
Mango
Lush
Tommy Hilfiger
Timberland
Foot Locker
G-Star
Diesel
Massimo Dutti
Max Mara
Jack Jones
Gant
Geox
Claire's
Adidas
Starbucks
Louis Vuitton
Hugo Boss
Not present
Not present
60%
65%
70%
75%
80%
85%
90%
95%
100%
15
Industrial Sector
The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania
is the 9th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in
EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers
16
Industrial Sector
Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner
having just under 12% market share (one project). As in most other CEE countries concentration levels are
already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is
an unique opportunity for specialized investors to build a larger platform.
10.7%
6.1%
2.6%
5.4%
Europolis
Prologis
Alinso
Immofinanz
Others
75.2%
17
Capital Markets
18
CEE Investment Volumes (excl. Russia)
16,000
14,000
2006 was the first year with a
relevant transaction volume in
Romania, as institutional products
started to be delivered and the EU
accession of the country became
imminent
Transaction volumes registered in
Romania were third only behind
Poland and the Czech Republic
The transaction volumes in Romania
remained below € 350 million per year since
2009, while Poland and the Czech Republic
recovered much faster, resulting in a
decreasing market share for Romania in CEE
12,000
Million €
17.7%
10,000
9.3%
8,000
4.2%
1.6%
6,000
3.8%
17.3%
4,000
9%
3.6%
2.6%
2,000
6.9%
9%
0
2003
2004
Poland
2005
2006
Czech Republic
2007
Hungary
2008
Slovakia
2009
2010
Other CEE (excl. Russia)
2011
2012
2013
Romania
19
Romania Investment Volumes
Record setting yield,
America House sold at
under 6%
Largest investment
volume recorded in
Romania
2,500
Thousands €
2,000
H1 2014 registered a volume
larger than any yearly volume
since 2008. FY expected to be
close to € 1BN
Volumes decreasing
due to the financial
breakdown
1,500
1,000
NEPI the most
active player
500
0
2004
2005
2006
Office
2007
Retail
2008
2009
2010
2011
Industrial
Mixed
Residential
Hotels
2012
2013
2014 H1
20
Financing
21
Romania Financing Availability
• 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE
(Poland, Czech Republic)
• 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing
mainly with the management of the existing portfolio
• Financing market improved since the second half of 2012, with several new large transactions being
financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase
of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti)
• During the last two years, banks’ sentiment towards real estate financing improved, in line with
macroeconomic indicators
Conditions
LTC / LTV
50-65%
DSCR
1.20-1.30
Maturity
5-10 years (with
balloon)
Full amortization
10-20 years
Interest risk
Depending on each
hedging
bank’s policy, loan
requirements
amount and
maturity
22
03.09.2013
09.09.2013
13.09.2013
19.09.2013
25.09.2013
01.10.2013
07.10.2013
11.10.2013
17.10.2013
23.10.2013
29.10.2013
04.11.2013
08.11.2013
14.11.2013
20.11.2013
26.11.2013
03.12.2013
10.12.2013
16.12.2013
20.12.2013
01.01.2014
07.01.2014
13.01.2014
17.01.2014
23.01.2014
29.01.2014
04.02.2014
10.02.2014
14.02.2014
20.02.2014
26.02.2014
04.03.2014
12.03.2014
18.03.2014
25.03.2014
31.03.2014
28.05.2014
04.06.2014
10.06.2014
Romanian CDS Rates Evolution
CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in
Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a
margin between 400 bps – 550 bps)
250
200
150
100
50
0
Czech Republic
Poland
Romania
23
Thank you!
Gijs Klomp
Managing Director
Head of Capital Markets
+40 21 302 3400
[email protected]
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