"We could exceed €1 billion this year," said Robert Miklo, Director, CEE Investment Services at Colliers.

Last year, the investment market hovered around €920 million, driven by major transactions in the office, industrial and retail segments."It is clear that inflation will not return to 1-2% in developed countries and it is clear that interest rates will rise," said Colliers' Head of Research Silviu Pop.

"There will be major consequences for Romania and the real estate market. In short, real estate is favoured by the context of economic growth and high inflation. There will be discrimination between asset classes," Pop added.

Amid sustained activity in the transaction market, prime yields have compressed by 50 basis points for office and industrial projects over the past year. As a result, office yields fell to 6.50% and industrial prime yields reached 7.50%, according to Pop.

Residential prices continue to grow

The office market is expected to see an uneven recovery, with projects featuring modern facilities set to record higher occupancy rates.

"We are at 2015 levels of demand in office, but the stock is much higher than back then," explained the Colliers representative.

In the area of industrial and logistics space, availability remains inferior relative to consumption. Pop explained that Romania has a per capita consumption similar to Poland and the Czech Republic, but the stock of industrial space is 2-3 times lower.

On the residential side, Colliers consultants expect prices to rise again this year unless there is a major economic event with negative effects.

"On the housing side, we are living in an economic moment where people are moving towards this asset class. Residential space prices tend to become relatively expensive relative to wages," Pop explained.

Colliers data shows that housing in Bucharest sells for an average of €1,783/sqm, the second-highest price regionally. Only Sofia has lower prices at €1,470/sqm, while Prague is the most expensive capital in Central and Eastern Europe at €4,703/sqm.

In the retail sector, new projects totalling 170,000 sqm are expected to be delivered outside the capital. The big shopping centres will recover fairly quickly, and we will see more attention paid to small towns, according to Pop.

Meanwhile, in the land market transaction volumes could reach €800 million in 2022 amid increased demand from residential developers and retailers. Prices in key locations in cities will continue to rise, concluded Colliers’ consultants.