Romania attracted €2.1 billion worth of foreign direct investment (FDI) from real estate and construction companies in 2023, accounting for 17.5% of the total investment volume recorded in the country, according to central bank data analyzed by Cushman & Wakefield Echinox.
The real estate and construction sector became the second largest recipient of foreign capital in Romania lat year, after industry (38.6% of the FDI stock) and ahead of trade (17.1%) and financial intermediation and insurance (13.4%).
For comparison, in 2022, the real estate and construction sector was the third largest recipient of foreign capital in Romania, with the country attracting around €1.2 billion worth of FDI from real estate and construction companies, accounting for 17.2% of the total investment volume.
Between 2013-2023, FDI in construction and real estate transactions have more than tripled in absolute value, growing by EUR 14.4 bln during the decade.
Meanwhile, the National Bank of Romania data illustrates the fact that FDI stock increase in construction and real estate transactions was mainly due to the positive accounting revaluations of tangible assets held by companies active in this industry as well as the robust operational results recorded by the respective companies, which allowed both debt repayment and lending to non-resident affiliated companies, thus reducing the need to access external financing instruments.
Commenting on the findings Bogdan Sergentu, Head of Valuation & Consultancy Cushman & Wakefield Echinox stated: “The real estate asset values have increased by a margin exceeding the inflation rate between 2015 and 2024. After a significant growth during the 2015 – 2019 period, the market liquidity remained stable during the pandemic in 2020 – 2021 and it is still healthy in 2024, as Romania boasts some of the most attractive yields in the region. The rise in inflation in 2022 and 2023 resulted only in minimum yield adjustments for prime assets, while the key interest rate cuts operated by the National Bank over the last few months are expected to have a positive impact on asset values”
However, the total FDI flows in Romania stood at €6.7 billion in 2023, down 36.3% compared with the record level recorded in the previous year. According to experts this drop can be attributed to international economic uncertainties and geopolitical tensions. Financial analyst Adrian Codirlaşu, the vice-president of CFA Romania, told Radio Romania International this downward trend has continued in 2024, amounting to 800 million euros less.
