Introduction
Bucharest is booming, yet Romania’s capital has a short supply of well-located, top quality commercial investment property. Situated on the western edge of the city, close to the arterial A1 highway, CentreWest Commercial Park is ideally located for both small businesses needing logistics space and to serve the thousands of shoppers that use the ring road every day.
Commercial properties are often the first choice for professional overseas investors because they are easier to manage and have minimal overheads. Our CentreWest units come with all the benefits of commercial investment property but at an entry price that is affordable to all.
Our logistics units represent the perfect hassle-free investment with a guaranteed 8% net rental guarantee for up to 10 years.
The retail units have the potential to be cash-positive with much higher expected yields of 15% but this is not guaranteed.
Demand for similar units from both multi-national and local businesses is strong – an ideal supply/demand situation to support future capital growth.
A 35% deposit with 65% non-status finance – virtually unheard of in this market – can secure a commercial unit in this development.
The table below groups the expert opinions of some of the world’s leading real-estate consultancies as to the current rental rates of commercial property in Bucharest and other Eastern European cities. The developer of CentreWest, which will have a part share in the rental management company, anticipates similar achievable income.
Open Market Rates
City centres achieve the highest demand and highest open market rental rates for retail units. In Bucharest, as in other major European cities, out of town properties typically command around a third of the price of city centre ones:
The purchase price offered at CentreWest is so competitive that even with a rate of just €20 per m2 per month, a retail unit could deliver a gross yield of around 25% per annum. As this form of income is not guaranteed we have used this prudent rate for all our calculations. For example:
“The Romanian industrial... property market is characterised by high demand for modern, highly specified facilities and a large supply of old and inflexible premises... demand for new flexible space grows every year5.” Colliers International
5. Colliers Romania Industrial Report 2006
Pooling Potential
The rental pool idea is simple enough – you add your property to the Ready2invest rental pool and the operator will let them out.
The operator will take a 40% cut of the total income to market, maintain, manage and let the units; the remaining 60% is shared out to retail unit holders in the pool. In this way the pool reduces risk by giving you an average profit from all of the units, so even if not all spaces rent, all investors share the income.
As indicated above, rental rates for out-of-town retail units are likely to deliver gross yields of some 25% – so even after the operator takes his share there is still a potential net yield of 15% p.a. And with demand at an all time high and international companies such as Vodafone, Zara and the Bank of Cyprus already showing interest in these units, we are confident that they will be rented quickly and effectively.
Whilst the advantage of the rental pool model means that you will benefit from the upside of potentially extremely high yields from all units, in the event that the income does not materialise, you will only have to cover the mortgage and costs of your unit.