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Romanian Capital Profiling
The landscape for capital deployment into residential real estate development is mainly characterized by:
- Scarcity of institutional capital presence – large investors in residential real estate development are mainly developers, who built their capital through equity accumulation, either Romanian or foreign. For leverage, these investors rely mainly on bank financing through senior debt. Junior debt/mezzanine financing is rarely offered on the local capital market.
- Regional capital concentration – except for a few large developers that have a national presence, the vast majority of residential developments are invested by local investors, therefore capital is concentrated in geographical allocations, driven mostly by demand.
- Issues to banking financing – despite expanding monetary policies since 2009, banks in Romania are reluctant in financing residential developments directly (they do it indirectly by issuing mortgage loans), very low land acquisition financing and no mezzanine loans and, as a result, small-to-medium developers are looking for alternatives to bank financing.
- Over 90% of homeownership in Romania indicates a high preference for investing in residential real estate and also Romania has the highest overcrowding ratio of the EU-28 countries therefore the demand for residential should continue (in 2017, some 16.6% of the EU-28 population lived in an overcrowded household; this rate ranged from a low of 5% in Cyprus, Ireland, Belgium, and the Netherlands to more than 40% in Hungary, Slovakia, Poland, and Croatia, and the highest overcrowding ratio of 48% in Romania, moreover, the average number of rooms per capita ranged from a high of 2.2 in Belgium, down to 1.1 rooms per person in Croatia, with the lowest average recorded in Romania – 1.0 room per person); however, generalized access to the market is difficult (significant barrier to entry – an average property would require an investment of min. EUR 60,000, renting expenses, taxes, maintenance, tenant turnover, etc.).
Managed assets investment returns in Romania
According to our research for 2021, equity funds have been very successful, with a median return of 27%, well above its 5-year average return of 16%. Fixed income funds have underperformed, while mixed funds returned a median of 10%.
| AUM 31.01.22 | Return 2021 | Average return p.a.* | Current fees (p.a.) | |
|---|---|---|---|---|
| Stocks | Median | 27.40% | 16.31% | |
| BRD Actiuni Clasa A | €29,250,051 | 36.43% | 23.44% | 1.90% |
| ETF BET Patria Tradeville | €10,593,289 | 36.22% | 24.87% | 1.82% |
| BT Index Austria ATX | €22,897,000 | 35.47% | 8.04% | 2.08% |
| BRD Actiuni Clasa E | €58,430,000 | 34.26% | 26.44% | 1.90% |
| Raiffeisen Romania Dividend | €48,857,894 | 34.26% | 21.90% | 2.26% |
| NN International Romanian Equity | €41,439,256 | 33.48% | 13.33% | 2.99% |
| BT Index Romania ROTX | €45,701,637 | 32.84% | 24.81% | 2.23% |
| Certinvest BET Index | €2,516,475 | 31.27% | 17.80% | 2.46% |
| Erste Equity Romania | €48,847,787 | 29.31% | 14.28% | 2.45% |
| OTP Expert | €9,121,083 | 28.68% | 23.86% | 1.07% |
| Certinvest Dinamic | €2,640,186 | 27.40% | 5.20% | 6.60% |
| OTP AvantisRo Clasa L | €14,522,943 | 27.11% | 23.77% | 3.26% |
| Certinvest BETXT Index | € 359,01 | 26.57% | 16.20% | 2.99% |
| OTP AvantisRo Clasa E | €2,512,000 | 25.25% | 11.80% | 3.26% |
| BT Maxim | €43,543,157 | 22.97% | 15.70% | 3.29% |
| Raiffeisen Global Equity | €33,960,000 | 20.32% | 19.67% | 1.53% |
| BRD Global Clasa A | €43,858,904 | 19.77% | 16.41% | 1.61% |
| BRD Global Clasa E | €30,470,000 | 17.86% | - | 1.61% |
| Erste Balanced RON | €100,080,857 | 17.58% | 9.77% | 1.80% |
| Certinvest BETFI Index | €1,233,273 | 16.73% | 15.20% | 2.47% |
| Patria Stock | €1,022,438 | 14.78% | 5.32% | 3.63% |
| Fixed income | Median | -0.38% | 3.03% | |
| Erste Bond Inflation Linked | €111,530,000 | 4.86% | 1.36% | 0.72% |
| Certinvest Obligatiuni | €2,065,696 | 4.10% | 3.20% | 1.58% |
| Patria Obligatiuni | €5,584,597 | 2.41% | 1.12% | 1.18% |
| Patria EURO Obligatiuni | €1,727,000 | 1.89% | 0.70% | 0.75% |
| BRD Obligatiuni | €38,250,051 | 0.12% | 9.49% | 1.15% |
| Raiffeisen RON Flexi | €75,421,872 | -0.13% | 3.24% | 1.08% |
| BRD Simfonia | €371,134,021 | -0.63% | 2.85% | 0.96% |
| BRD USD Fund | $114,704,000 | -1.13% | 3.58% | 0.99% |
| Raiffeisen RON Plus | €355,164,746 | -1.19% | 7.72% | 1.09% |
| BRD Euro Fund | €139,140,000 | -1.49% | 5.84% | 0.45% |
| NN International Romanian Bond | €27,286,234 | -3.72% | 1.70% | 1.50% |
| Erste Bond Flexible Romania Eur | €208,120,000 | -3.83% | 1.14% | 0.96% |
| Others (mixt stock&fixed income, specific) | Median | 10.46% | 7.66% | |
| BT Real Estate | €2,530,000 | 19.75% | 3.51% | 2.74% |
| NN International Dinamic | €32,821,508 | 16.93% | 7.66% | 2.82% |
| BT Agro | €1,883,000 | 15.00% | 2.51% | 3.28% |
| BT Energy | €12,083,000 | 14.78% | 25.06% | 3.16% |
| BT Technology | €8,023,000 | 13.16% | 11.39% | 2.72% |
| Patria Global | €3,397,817 | 10.46% | 17.88% | 2.85% |
| BRD Diverso Clasa A | €42,513,038 | 10.37% | 8.90% | 1.82% |
| BRD Diverso Clasa E | €29,271,000 | 8.62% | 6.23% | 1.82% |
| OTP Global Mixt Clasa E | €4,011,000 | 8.53% | 4.20% | 221.00% |
| OTP Real Estate & Construction L | €6,537,497 | 1.72% | 1.85% | 2.20% |
| OTP Real Estate & Construction E | €1,964,000 | 0.23% | 10.47% | 2.20% |
*Over the last 5 years or since inception
