Commercial, Office Space - The Less Risky Property Investments

Commercial space and office space that has been already built or is very close to completion would be a less risky property investment, according to the real estate agency EuroMetropola. The agency exemplified with the portfolio of Fabian Romania, which largely comprises already delivered office buildings rented to tenants who are financially sound for the next four years. Most of the buildings in question are located in the northern part of Bucharest. Some of the items in the portfolio are mixed developments (residential, commercial and office space in the same compound).

EuroMetropola indicates in a press release that the office space segment of the real estate market remained immune to the crisis in 2008, as the rents entirely preserved their margin. In 2009, a decline would be possible only if the supply of office space were to increase considerably and the gap between very good projects and projects with a bad price - location - quality ratio were to become much more evident.

The northern and central parts of Bucharest contain the bulk of the Class A office space available on the market. Prices vary between 18 and 25 EUR/ sq.m./ month. Office space in the western parts of the city comes second, with rents between 10 and 18 EUR/ sq.m./ month. Street-front commercial space remains a safe and strong segment of the market, as owners can rely on constant revenue. During a time of crisis, investors tend to prefer properties that generate liquidities through rent, according to EuroMetropola. However, success is not guaranteed even for commercial centers and office buildings. The location and the quality of the tenants are major factors for a good capitalization rate.

As for land, properties that used to generate a profit rate as much as 100% tend to lose their attractiveness. EuroMetropola points out that the crisis blocked all transactions in the second half of 2008. The value of a property is difficult to estimate under such circumstances, given the large fluctuations in the prices demanded by sellers and the lack of relevant transactions on the land market. Those who own land and are not desperate for cash prefer to wait rather than sell during market turbulence. If the plot of land is large enough, owners and developers may even create partnerships for real estate projects.