Business Review: Romanian economy may recover fast after the pandemic

China is already on a recovering trend after the Covid-19 outbreak. A similar outcome could be expected for Romania, mainly driven by eCommerce, after the outbreak peak is surpassed, says

The business environment in China was the first hit by the Covid-19 epidemic, but the fast decrease of new cases in the past weeks brings hope for recovery in the second half of the year, with a positive impact on the real estate market as well. Based on China’s evolution, a similar outcome could be expected in Romania too, mainly driven by eCommerce, after the outbreak peak is surpassed and the number of new cases drops, Colliers International consultants predict. Moreover, the current situation can bring growth opportunities for certain industries including segments of the real estate market.

With much of China’s office economy having run via remote working during the first quarter of this year and although many have been affected, 85 percent of the interviewed landlords indicated tenants have no plans to downsize their leases, based on a Colliers International survey conducted among companies in the real estate segment from China. Even so, tenants’ expansion plans in 2020 are nonexistent for most respondents (92 percent).

Some sectors such as online shopping, online education, online gaming, pharmaceuticals and healthcare seem to be benefiting from the situation and will boost office leasing demand amid the Covid-19 driven lockdown in mainland China, which can be a reference for potential recovery after the epidemic in other parts of the world as well. In this context, Colliers consultants believe that landlords should strive to appeal to these sectors and adjust their tenant mix. For business sectors like IT and healthcare, which were less impacted in China, or which may even be seeing increasing sales, tenants are expected to try to negotiate favorable long-term leasing deals.

About 59 percent of the interviewed landlords in China believe rents will remain stable, according to Colliers International’s survey, while 29 percent expect rents to face downward pressure. In terms of vacancy rate, 40 percent of the landlords believe vacancy will remain unchanged. Overall, 34 percent of the surveyed companies believe their business will remain unaffected by coronavirus this year, while 19 percent say they have already been negatively impacted and 26 percent expect some sort of impairment to their business. However, small and medium-sized enterprises (SMEs) have been more affected, with 54 percent declaring that the coronavirus negatively impacted their business.

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