and 6:40p.m. If you are a trader and want to know about the price movement and trends of SGX NIFTY, you can follow historic charts of SGX NIFTY. (See Exhibit 2. The collection of Investor Compensation Levy is currently suspended and no person is required to pay since 2005. nter-WestCenterFloreasca/Barbu VacarescuCBDOthers43%Computers&Hi-Tech14%Consumer Services&Leisure10%Professional Sector33%Others23CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 13:Main Indicators By Sub-market(Modern Stock|Headline Rent)At years closing,Bucharest modern office stock recorded an overall vacancy rate of 14.1%,with 1.0 pps higher compared with the vacancy from the end of 2021.When looking exclusively at class A office premises,the vacancy rate is decreasing down to 12.3%.Nonetheless,if the sub-lease availabilities should be considered,the option of spaces to rent increases considerably.The trend that amplified in the post-pandemic era offers a quick fix for tenants in need for a space limited within the contractual term prior agreed by sublessor.At Q4 closing,prime rent reached at EUR 19.50 sq m/month,after a subsequent growth of EUR 0.25 sq m/month registered in the first quarter of the year.Looking retrospectively,the change in prime rent from Q1 2022 was the first movement registered since the first quarter of 2020,the in between period marking a stagnation at EUR 18.75 sq m/month.Such evolution may come as a response to the overall economic environment,with office owners addressing somehow the increased operational costs and rising inflation,coupled with the limited office new supply in Bucharest on short-term.Even so,landlords maintain their flexibility when negotiating a lease,offering incentives that can lower the net effective rent.5791113151719210100,000200,000300,000400,000500,000600,000700,000CBDCenterCenter-WestFloreasca/BVDimitrie PompeiuPipera NorthNorth-WestBaneasa-OtopeniEastWestSouthEUR/SQ M/MONTHSQ MNon-Green StockGreen StockHeadline RentWe are witnesses of modern office market shaping.The modern stock it isnt any more about solely class A&B,but green versus non-green office projects.With companies necessities to comply with ESG regulations and at the same time to create an inclusive office concept,working from the office nowadays fundamentally transformed the workplace,with human centreddesign dedicated to build communities,that ultimately could be chosen over working from home.Tudor IonescuHead of A&T Services Office,CBRE RomaniaIndustrialNew Benchmarks Achieved26CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 14:Romania Modern Industrial Stock EvolutionAt the end of 2022,Romanias industrial stock gathers 6.59 mln.sq m of modern spaces,as circa 895,000 sq m were added throughout the year.With half of the total new deliveries,Bucharest region continues its development and maintains singularity compared with the other four industrial development regions,which together welcomed the other half of the yearly new supply.6.59 MRomanias industrial stock of modern spaces by the end of 2022sq m895,000Of industrial space was delivered last yearsq m49%Of the total new supply was added in Bucharest -500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,00001,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,000201720182019202020212022BUCH(SQ M)RO(SQ M)RomaniaBucharest27CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 15:2022 Romania ModernStock By RegionThis equity between shares of new supply,broke a consecutiveness of two years when the capital city usually claimed more than half,meaning 60%in 2021 and 68%in 2020 of the new deliveries.The fifty-fifty share split of new spaces between the capital city and the other industrial regions within the country,can be transposed to the entire modern stock,where Bucharest is the countrys main logistic region,with 49%of the total area.Bucharest49%South15ntral10%West/North West24st/North East2(CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 16:Romania Industrial Stock EvolutionMoreover,the impressive amount of the 2022 new supply,showing a 54%YoY increase and marking a new peak in terms of new deliveries,indicates not only the prosperous trend inflicted by 2020 events,but developers willingness to expand and develop new hubs throughout the country.The years record can be attributed to both local and internationally established industrial developers active in the Romanian market.A further split can be performed for Bucharests stock which at the end of 2022 gathers 3.26 mln.sq m of modern spaces.Here,the most developed logistics area can be found within the axes described by the cardinal points North and West,this part of the city gathering 85%of the annual new supply,the remaining share of 15ing distributed to East and South areas,with percentages of 11%respectively 4%.The steady yearly new supply in the last six years,with new spaces per year amounting to more than half a million sq m,with two exceptions in the analysed period(in 2017 and 2019),led to afast-tracked growth of the countrys modern stock,the total amounted delivered in the 20172022 time frame representing 56%of Romanias stock.As concerns the territorial fragmentation of the yearly new supply,besides the half claimed by the capital city,the other half was disputed by the West/North West region,which managed to attract a share of 32%from the total area,followed by South,Central and East/North Eastregions with shares of 9%,6%and 3%of the new deliveries.Figure 17:2022 Romania New SupplyFigure 18:2022 Bucharest New Supply01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,000201720182019202020212022SQ MModern Industrial StockNew Supply502%9%6%3%BucharestWest/North WestSouthCentralEast/North East375%4%NorthNorth WestWestEastSouth29CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 19:Romania Modern Industrial Pipeline By Region(U/C to be delivered by end of 2023)In an attempt to minimize distribution chain disruptions for their tenants,industrial developers who choose to create logistics hubs in areas with underdeveloped infrastructure,managed to set an alternative way of cargo management(air/sea/railroad).In addition,changes in modern stock and leasing activity bring into the spotlight tenants behavior throughout the year when sale and lease back transactions were concluded,as well as leases concerning nearshoring,consolidation,and storage areas in accordance with new volumes requested by the market.With an estimated delivery date by the end of 2023,circa 550,000 sq m are expected to be added to the countrys logistics stock,considering the under-construction projects monitored at Q4 2022 closing.Following the trend established in the last six years,the future new supply estimated for 2023 will surpass the half million leasable sq m threshold and will push Romanias modern stock over 7.0 mln.sq m.Nonetheless,when designing future projects,one important aspect that developers should not disregard is the ESG standards compliance.This has become a necessity nowadays,marking the competitiveness of a new project as well amongst potential tenants.The two most developed industrial regions within the country,Bucharest and West/North Westregions,will further attract the largest share of the future new supply,jointly benefiting of 68%from the under-construction area.What comes as an encouraging sign as the 2023 forecast unfolds is that the East/North East region places the third with 18%from the future deliveries surface.Once overlooked by investors mostly due to underdeveloped infrastructure in the area,the East/North East part of the country,managed to attract local investors willing to create the foundation of the industrial modern stock in the area,with developments that can further attract and encourage both public authorities and logistics players to invest in this region.Having below 10%share per region,Central and South markets will jointly host 14%of the area to be delivered by the 2023 closing.When designing future projects,one important aspect that developers should not disregard is the ESG standards compliance.This has become a necessity nowadays,marking the competitiveness of a new project as well amongst potential tenants.0%5 %05E%SouthCentralEast/North EastWest/North WestBucharest30CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaAt the end of 2022,the vacancy rate of Romanias industrial modern stock stands at 4.5%,while the vacancy rate for Bucharest is 5.8%.The marginal YoY growth in the overall vacancy rate of 0.6 pps reflects the moderns stock capacity to absorb the increasing demand for logistics spaces with yearly record values,as well as developers willingness to deliver larger shares of speculative spaces.Headline rent in logistic parks registered an increase of EUR 0.2 sq m/month compared with the value from the previous years end,reaching EUR 4.10 sq m/month,while the net effective rent is EUR 3.70 sq m/month for a 5,000 sq m standard unit.The 5%annual growth marks the first changes in rent from the end of 2020 and can be correlated with the general economic context as well as with logistics demand,availabilities,and construction costs.4.5%Vacancy rate of Romanias industrial modern stock in 20224.10Headline rent in logistic parks in 2022sq m/month31CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSumming 1.11 mln.sq m,the industrial transactional activity for the first time overpassed the 1.0 mln.threshold and it is with 31%higher compared with the amount concluded in 2021 and with 21%higher when comparing with 2020 which now became the second-best year in terms of leasing activity and new supply.With seven transactions ranging between 88,000 sq m and 20,000 sq m,the average deal size in 2022 stands around 5,800 sq m,with a value of 8%higher than last years average.RECORDA single word can describe the industrial total leasing activity(TLA)for 2022,the best year ever recorded for logistics players.32CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 20:Romania Total Leasing Activity EvolutionTake-up(total transactions excluding renewal/renegotiation)claimed 83%of the total leased surface throughout the year.Also known as new demand,the overwhelming majority held within the 2022 TLA,the outstanding amount of let area falling in take-up category,is a vivid sign of market players in need for a new or larger leased space.The YoY evolution reveals an increase in take-up,with 50%compared to last year and 28%compared with the reference year 2020.1,11 MRecord industrial transactional activity in Romania reached in 2022sq mseventransactions ranging between 88,000 sq m and 20,000 sq m5,800average deal size in 2022 with a value of 8%higher than last years averagesq m0200,000400,000600,000800,0001,000,0001,200,000201720182019202020212022SQ MTake-upRenewal/Renegotiation33CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaThe vibrant leasing activity could be felt in all five industrial regions,but even so,Bucharest remains the largest demand generator with 61%from TLA.Much behind,the second most active market was registered in the Southern region which attracted 19%of the total leased area,followed by West/North West with 11%,Central and East/North Eastregions with 5%,respectively 4%.Demand distribution within the capital city points again towards tenants preference for the Western part,representing more than 60%of Bucharest TLA.As concerns,the main purpose to rent an industrial space,almost half of the area was requested for Logistics purposes,while the other half being disputed amongst Storage,Production,and Other purposes.As per tenants domain of activity,retailers and logistics players dominate the transactional activity.As a ripple effect of 2020 supply shortages experienced by retailers,the 2022 TLA noted large areas leased by retailers,especially from F&B and fashion industries,which secured spaces in order easier accommodate requests from their local and regional buyers.Romania industrial and logistics market just completed a thriving year,one of a kind on its evolutionary path.With new benchmarks achieved in terms of leasing activity and new supply,new thresholds are expected to be crossed this year as well,when Romanias modern stock is expected to exceed 7.0 mln.sq m.One aspect that shouldnt be disregarded by market players in a fierce competition,is the green certification which now can be an ace in the sleeve,alongside future infrastructure developments.Victor RchitHead of Industrial&Logistics,CBRE RomaniaRetailScaling-up To Next Level36CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaModern retail stock in Romania,gathers at the end of 2022 circa 4.08 mln.sq m,as eleven new retail parks were inaugurated throughout the year.The annual deliveries amount 86,700 leasable sq m,from which Bucharest attracted 41%with three newly built retail schemes,while the great majority being developed in tertiary cities but strategically placed near the counties capitals such as Iasi,Timisoara,or Craiova.4.08 MModern retail stock in Romania reached in 2022sq m86,700The annual retail deliveries in 2022sq m37CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaWith an overall share of 38%of the total stock surface,retail parks gain both larger nationwide coverage and popularity amongst retail developers.Source:CBRE Research,Oxford EconomicsFigure 21:Modern Retail StockRetail Park developments dominate the years new supply,claiming 81%of the total area,the impressive amount contributing to the countrys modern stock change in composition.With an overall share of 38%of the total stock surface,this format will continue to grow given the development of smaller size cities which cannot accommodate a shopping center.Bucharest is home to more than a quarter of the countrys modern stock,at 2022 closing accounting circa 1.23 mln.sq m,with area split 63%in shopping centers and 37%in retail parks.0500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000201720182019202020212022SQ MRegional CitiesBucharest38CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaSource:CBRE ResearchFigure 22:Romania Retail Stock By Format&By LocationThroughout 2023 another 265,000 sq m are expected to be added to the countrys modern stock considering the under-construction and planned projects with an estimated delivery date by the end of the year.More than three quarters of the future new supply is developed as a retail park format,out of which the overwhelming majority of 93%will be welcomed in secondary and tertiary cities.Even if the capital city hosts enough space for retailers to grow,the advance of retail schemes in Bucharest seems to embark on a slower pace,as regional cities attract local and internationally known investors.The closeness to end users and the untapped territories by established retailers reveal small-sized towns throughout the country as the new places to pinpoint on their expansion map.265,000New supply expected to be delivered in 2023sq m93%Of the retail parks will be developed in secondary and tertiary cities 75%More than of the future new supply is developed as a retail park format30c7pb800,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000Modern StockShopping CenterRetail ParkSQ MBucharestRegional Cities39CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaThe continuous addition of modern products to the countrys retail stock and the well-known Romanian spending habit encouraged new companies from various industries to expand or enter the local market.Seventeen newcomers opened stores in 2022,and most of them chose Bucharest as the first location in the country.For instance,retailers from fashion and sport industry such as Primark,Converse,JD Sports or Foot Locker inaugurated their stores in shopping centres,Health&Beauty like Bath&Body Works and Equivalenza,entertainment like Cyber Jump while F&B players such as Popeyes,Poke House,and Submarine Burger selected either shopping centers,high-street or within mixed-use projects spaces.The variety of picked places by newcomers to mark their entrance is a powerful statement that shows how competitive Romania is within the CEE region in terms of variety of products and private consumption.Towards years end,the overall vacancy rate in retail schemes maintained a very low level,with tenants making a clear distinction between prime and non-prime locations.As the footfall is starting to pick up,another reassuring signal for retailers that the market is on an upward trend are the high level of sales for specific shopping centers and retailers,amount overpassing the level marked in 2019 a reference year for retail market.very low levelfor overall vacancy rate in retail schemes40CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaA retail component that returned to the spotlight is the high street,a comeback mainly triggered by the pandemic outburst,which managed to maintain and further attract both tenants and clients throughout the year.Started as a helping hand for retailers,transforming pedestrian areas at weeks end within the city,established high street locations such as Victoriei Avenue in Bucharest became a weekend destination.With the possibility to choose amongst multiple restaurants,bars,coffee,and ice-cream shops,and several clothing and accessories stores,it seems that retailers from F&B industry are the first to gain from this revival,while players from the Fashion sector either wait for this type of retail to gain more popularity amongst the local buyers or search for the best location for their products.41CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaAt the end of 2022,prime rents maintained at the same level from the end of the previous year for high street locations,respectively at 45 EUR/sq m/month,while shopping centers witnessed an increase of 5.0 EUR/sq m/month,from 70 to 75 EUR/sq m/month.Source:CBRE ResearchFigure 23:Modern Retail Stock Evolution|Romania(Forecast)Forecasted to reach 4.35 mln.sq m by the end of 2023,considering the underconstruction and planned projects,Romanias modern stock is set for an accelerated growth,with retail players resuming development plans adapted to current market requirements and as close as possible to their customers.With a share of 78%of the future new supply,the specialized format of retail parks is the type of brick-and-mortar on which retailers agreed to mainly expand the modern stock,marking a resilient and adaptive evolutionary stepfor the market.The in-store brand experience is something that was longed for in recent years,and even though e-commerce gains new users,the comfort of being advised and see,try and buy on the spot a product are the things that will keep traditional retail in the investors real estate race.Even if summing advantages such as higher products variety and offers,the e-commerce slowed down its growth in 2022,being estimated a 10%YoY increase of the total amount transacted.Nonetheless,remaining on the traditional side of retail,developers must address the latest requirements of the tenants with direct reverberation on the quality of users experience.ESG compliance can not be named a novelty in this sector as more and more investors and developers make continuous efforts in reducing carbon footprint and remain in the same time competitive on the market.0500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000201720182019202020212022F2023SQ MModern Retail StockNew SupplyThe bricks in brick-and-mortar retail projects seems to have rearranged.Clearly distinguishing between prime and non-prime locations,2022 meant for specific shopping centers and retailers a rise of sales,towards levels overpassing the results registered in 2019 a reference year for retail players.The powerful sign sent by market players comes from the seventeen newcomers which testify Romanias competitiveness amongst CEE region in terms of variety of products and private consumption.Carmen RavonHead of Retail Occupier CEE,CBRE RomaniaLandChanging The Perspective44CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaThe total transacted plots in Romania summed more than 220 hectares during last year,split between Bucharest with its proximity(48%)and secondary and tertiary regional cities(52%).Source:CBRE ResearchFigure 24:Total Land Transactions(sq m)by Type of UseMore than 220 hectares of development land were transacted throughout Romania during 2022.Almost half of the total area is located in Bucharest and its proximity,part of Ilfov County,while 52%of the sold land plots can be found within secondary and tertiary regional cities such as but not limited to Oradea,Timisoara,Iasi,Constanta,Sibiu and Targu Mures.In terms of future use and what buyers plan to develop on their newly acquired plots,the development sites withindustrial potential were the most accounted for 41%of the overall transacted surface.At a considerable distance but with a bit over a quarter from the total area,land plots suitable for residential developments were the next in line as the most desirable assets,followed by land plots suitable for mixed-use developments with a share of 23%.The remaining 8%was distributed towards sites for future retail,office,hotel and other types of projects.41%Industrial28%Residential23%Mixed-use6%Retail2%Others45CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaThe largest transaction in 2022 was concluded in a regional city and is represented by the acquisition of circa 27 hectares of land by Oradea City Hall.The public authority intends to expand the Industrial Park IV and to further attract investments within the project.Nonetheless,notable transactions were made in Bucharest as well,as 24 hectares of land,part of the former Chimoparplatform,located in the Eastern part of the city was purchased by the local company Edificia Star Construct.For this particular site the buyers envisioned a large future residential project.24 haWere acquired in Bucharest by Edificia Star Construct for a future residential project.27 haThe largest land acquisition made in 2022 by Oradea City Hall for industrial development.46CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaThe buyers requests and signed agreements over the year,contoured the real estate market trends for each development sector,offering the possibility to forecast future developments and trends.Thus,looking at the office market,there are several projects in stand-by,developers usually expecting to secure a large pre-lease in order to deliver the building.Moreover,since the public authorities did not manage to solve the zonal urbanistic plan(PUZ)issue in Bucharest,a shortage in office new supply already can be observed.This blockage coupled with tenants preference to integrate the hybrid working schedule make office developers reluctant in investing and announcing large-scale projects.The sites with residential development potential showed their resilience during challenging economic environment,while the first transactions with land plots for residential use but with a rent component were recorded this year.This type of demand is starting to pick up against the backdrop of the increase in interest rates and inflation,two factors that put pressure on selling prices.Another change in habits is revealed by developers which became willing to find business partners and create joint venture projects in order to dissipate risks,including the risk of a delayed project due to urbanism approvals.Nonetheless,demand for development land plots targeted by investors of luxury residential compounds seem to not be affected as there is a constant demand for apartments generated by cash buyers.Demand for development land plots targeted by investors of luxury residential compounds seem to not be affected.In Bucharest,a shortage in office new supply already can be observed,since the public authorities did not manage to solve the zonal urbanistic plan(PUZ)issue.47CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaRemarkable and constant outcomes marked by the industrial market,especially in terms of leasing activity contributed at the increased demand for sites throughout the country suitable for such developments.Even if logistics premises can be rapidly build-up once authorizations are in place,landlords still prefer to start construction works applying a half-half strategy,meaning that at least half of the leasable area is built-to-suit based on a pre-lease agreement,while the remaining area is available at any time,no matter the construction status.In addition,the buoyant transactional activity encouraged developers to extend their attention towards regional cities,not necessarily established as industrial hubs.Thus,cities gathering approx.200,000 inhabitants such as Ploiesti,Braila,Brasov and Iasi are amongst the new places were investors secure land plots for future logistics projects.Retail developers especially those with focus on retail parks,are actively acquiring and in search for sites throughout the country,including small cities with 10,000 inhabitants.Even so,the scarce offer for suitable land plots leads to retailers flexibility when negotiating a viable opportunity.Retail developers are actively acquiring and in search for sites throughout the country.The buoyant transactional activity in the industrial market,encouraged developers to extend their attention towards regional cities.48CBRE RESEARCH 2023 CBRE,INC.Conquering PeaksReal Estate Market Outlook 2023|RomaniaFor 2023 asking prices are estimated to maintain at the same level for office land plots located in prime locations,while a downward pressure can be felt for those in secondary locations.Asking prices for residential sites are expected to witness a decrease as well,while development plots for retail are forecasted to maintain at the same level from 2022.