BMI's interviews with in-country sources in Romania in early 2010 and in the middle of the year revealed a particularly grim picture of the commercial Real Estate sector. Market protagonists had not foreseen how severe the impact of the global financial crisis would be. Nor did they envisage the extent that multinationals that had planned on building new factories and installations would divert investment to other nearby countries. Business sentiment has also been hurt by Romania's domestic political problems.
The main consequence has been an extraordinary oversupply of commercial property, which is detailed in this report. BMI's sources report that vacancy rates that exceed 20% are the norm. However, the lack of commercial real estate transactions has meant that there has not been a downwards adjustment in prices and capital values - to fire sale levels. As a result, the recent slump in rents has resulted in a sharp fall in observed net yields over the last year or so.
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