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Cluj-Napoca, the most expensive residential market in Romania

Cluj-Napoca, the most expensive residential market in Romania
Cluj-Napoca, the most expensive residential market in Romania 2560 1707 ROMANIA PROPERTY CLUB

Residential analysis with the support of imobiliare.ro

Cluj-Napoca, the most expensive residential market in Romania

One of the most dynamic regions in the country, Cluj is a leader for the broader Center-West area. Its youthful and entrepreneurial vibe appeals to more than 679,000 inhabitants, out of which 287,0000 live in Cluj-Napoca, the county’s capital.

A beacon of entrepreneurial success among Romanian regional leaders, Cluj’s strong economic development is fuelled by the second-largest population of students -72,000. All these figures translate in a powerful demand for modern housing units. The strong demand, without a similar offer, leads to high price increases.

According to imobiliare.ro, prices for new units reached in September 3,230 EUR/sqm, 75% higher than the medium prices at national level. As compared to September 2023, the increase is 20.6%.

Areas with the biggest offer include: Manastur, Marasti and Gruia. Each new apartment put for sale has two potential buyers. The biggest demand is in the Center & Zorilor areas.

The medium rents for new residential units reached in September 690 EUR/month, a 6% increase, compared to the same period from the previous year.

For each new apartment listed for rent there are three potential tenants. Marasti, Center, Manastur and Zorilor are the most wanted areas for rented apartments.

Gobant Office Designed By Cos

Cluj: Local office market revival
Cluj: Local office market revival 2560 1709 ROMANIA PROPERTY CLUB
Gobant Office Designed By Cos

Office Design by COS for Globant, Cluj

While the modern Class A office stock remained constant at 340,000 sq m, Cluj registered the most dynamic leasing market outside Bucharest in 2024. Close to 30,000 sq m were let in Cluj, a significant uptick compared to the past two years.

The city dubbed “Silicon Valley” of Romania attracted new employers in the IT&C sector, such as Yopeso and HN Services. Companies with a major presence, such as Betfair and Endava, chose to extend their leases, leading to significant renewals of 8,500, and 4,500 sqm, respectively. New entrants in Romania, such as Copeland, acknowledged Cluj’s leading role in nurturing a qualitative talent pool by opening a multi-disciplinary service center that will be a home for more than 200 professionals. Banca Transilvania, the leading financial institution in Romania, headquartered in Cluj extended its presence by renting nearly 4,000 sq m.

Thus, rents registered a slight uptick, ranging between 14 to 16 EUR/sqm. The vacancy rate is single-digit, lower than in Bucharest and other leading regional cities. The prime yield stands at 8.75%, reflecting the recent year’s volatility and increase in interest rates.

In the medium term, more than 70,000 sqm are expected on the market. In addition to the extension of Liberty Business & Technology Park, one of the most expected new deliveries is Iulius’s Group’s new 15,000 sq m development on the former Carbochim platform. Part of a landmark mixed-use development, the new office building will allow companies to benefit from the premium environment created by integrating an ultra-modern shopping destination, lush green areas, and leisure facilities. Iulius has already put its toll on Cluj, following the same transformative urban regeneration strategy applied in Iasi and Timisoara. The office component, under the United Business Center umbrella, features three separate projects built in 2008, 2014, and 2018, totaling 27,000 sqm. Companies that chose to work in UBC buildings include Endava, Genpact, Office Depot, and Analog Devices.

The Office is one of the emblematic business parks in ultra-central Cluj-Napoca. The 60,000 sqm of office and retail were built by Mulberry Development and NEPI Rockcastle custom to Cluj-Napoca market needs.

As this was an accelerated growth market, the business park was constructed in three phases between 2013 and 2017 with the end goal of delivering a 9,000 sq m united floor plate, that could host up to 1,000 employees on a single level. As the metro project is years in the making, The Office concept features 1,100 car parking spaces and up to 400 bicycle/motorbike racks.

The modern amenities, 200 seats capacity conference center, and visually appealing landscaping serve community building purposes for companies such as Deloitte, Yonder, 3Pillar Global, Bombardier, Betfair, Steelcase, National Instruments and Bosch. In 2019, Paval Holding added the landmark property to their portfolio for c.a. 130 million EUR.

Hexagon Offices is a Class A business complex delivered in mid-2019 by a joint venture between local entrepreneurs who managed to secure top-tier tenants such as Cognizant and Accenture. It exchanged hands for 32 million EUR at the end of 2019, being taken over by a Romanian family business.

Another considerable mixed-use development is Prime Kapital’s 17 ha urban regeneration project on the former Cesarom platform. In addition to a medium-sized shopping center and a much-needed residential component, the project should bring 49,000 sqm of offices to market. The master planning and permitting process is still under development, with a soon-to-be-announced timeline.

Silviu Babtan

SILVIU BĂBȚAN, Office Buildings Manager IULIUS Cluj

“2024 was an exciting year for our office component in Cluj-Napoca, as a consequence of a new stage of expansion for companies. We recorded one of the most significant transactions on the office market in Romania, the largest outside the Capital, to our knowledge, representing a new partnership for 8,500 sqm, with a single company, in the IT field. Also, in 2024 we signed new contracts and extensions for an area of ​​20,000 sqm, out of a total of 27,000 sqm totaling the three office buildings developed, in Cluj-Napoca, by IULIUS under the national United Business Center brand. Thus, approximately 50% of the transactions registered this year, in Cluj-Napoca, were for our office buildings. We are at 100% occupancy, but we are happy with the interest in new partnerships, in the context of the development of 15,000 sqm of premium office spaces, in the RIVUS mixed-use urban reconversion project, for which the IULIUS company announced the approval of the Zonal Urban Plan of to the Cluj-Napoca Local Council.”

IuliusTown Flight Film Tm23 127

Local office market registers slowdown
Local office market registers slowdown 720 480 ROMANIA PROPERTY CLUB
IuliusTown Flight Film Tm23 127

The office market in Timisoara registered a slower pace, in line with the regional office markets across Romania for the past few years.

The local modern stock amounts to approximately 300,000 sqm, with headline rents ranging between 13.5-15 EUR/sqm/month.

During H1 2024, the total market activity amounted to 5,000 sq m, half of last year’s total market activity. This is significantly lower than the traditional ~30,000 sqm / year leasing volume in Timisoara. While Cluj fared better during this particular year, with close to 30,000 sqm let, if we analyze the main office markets outside Bucharest (Cluj, Iasi, Timisoara, Brasov) for the past 3-4 years, we will notice an overall slowdown.

If in Bucharest the leasing pace is strong, even accounting for the downsizing and renegotiation trends. The regional cities had a different dynamic in the past three years. The reasons are multiple:

  • Switch in working patterns – hybrid/work from home allowed for employment across the country, with fewer reasons to secure regional hubs; that being said, companies still need a meeting and training point.
  • Recruitment challenges: while in some cities challenges are represented by strong competition among employers that would drive salaries up in margin-focused businesses (strong presence in Iasi and Timisoara), others are more fundamentals – meaning difficulty in recruiting for the right technical skills. Timisoara’s authorities’ efforts to improve student housing, lifestyle appeal to youth, and increase net wages are crucial to the economic future of the city.
Laurentiu Manea Iulius RPC

“The first half of this year was challenging; the office market being influenced by the macro-level evolution of the economy. However, the IULIUS company has a solid portfolio of partners, which has grown organically, and fluctuations in our network of office buildings have been minimal, managing to maintain a 100% occupancy rate. Particularly for this year, requests came from the medical sector. “

“We have succeeded in consolidating a unique specialized medical hub in the Iulius Town mixed-use project. The integration of medical operators required compliance with specific requirements much more complex than those of an ordinary tenant, because we are talking about spaces that must meet certain rigors. We are extremely satisfied that we managed, together with our tenants, to integrate all requests and have, today, an extended range of such services”, said Laurențiu Manea, Office Buildings Manager, Iulius Town Timisoara

Benchmarked against Iasi, one of the meaningful regional office markets, with 0 Class A square meters left during the first six months of the year – Timisoara performed by accounting for 15% of the office demand outside the capital city. The vacancy rate for the local market was maintained at around 14.5%. Besides the office component from Iulius Town, another important development is AFI Park Timisoara, a legacy project owned by AFI Europe.

Low development pace for Brasov office market

Low development pace for Brasov office market
Low development pace for Brasov office market 1618 1080 ROMANIA PROPERTY CLUB

15.04.2024

Low development pace for Brasov office market

The Brasov office market size and pace is dictated by the pipeline of university students (c.a. 20,000 per year), ranking 5th after Bucharest, Cluj, Iasi, and Timisoara. The modern stock was maintained at 155,000 sq m, with no new developments in 2023.

However, AFI obtained the building permit to continue building Phase II (10,000 sq m) for the office park adjacent to the AFI Brasov Mall, with an expected delivery date in 2026.

The headline rent slightly increased to 13.5 EUR/sq m, even though the pace of take-up was as slow as in 2022. Fewer than 5,000 sq m were transacted in 2023, mainly by IT & C companies. The take-up trend aligns with other regional leaders, where new absorption was less than 10,000 sq m / per city through 2023.

While the average wage in Brasov is 1,400 EUR/month, below Cluj, Timisoara, and Iasi, work from home and hybrid policies led to a supply of subleases, whereas new entrants preferred to focus on the opportunities offered by the talent pool in Romania’s main city.

Remote work, which allows talent from anywhere to connect to a virtual delivery office also contributed to the slower take-up throughout the country. In Brasov, remote workers are served by co-working, such as The Business Factory located in Coresi. Raiffeisen Bank also offers a few co-working offices through its Hub1317 program.

Strong multinational tenants in IT&C, BPO / SSCs, and retail are being served by the existing three business parks in the city, AFI Offices, Coresi Business Park, and Brasov Business Park. The latter might resume construction of its next phase during the medium term, subject to demand.

The outcome of the public debate on the zoning and services required by the 36ha urban regeneration of the former Rulmentul factory might dictate a new development pole on the long term.

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