ANALYSIS Unexpected effects of Brexit on industrial spaces in Romania – News on sources

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The Romanian industrial space market could experience significant effects following a severe Brexit, according to the specialists of a real estate consulting company, informs Agerpres.

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"The UK is the fifth or sixth largest export destination for both Romania and the country's main trading partners – Germany, Italy and France. Thus, a hard Brexit would also have significant side effects through the other trading partners. of Romania, which have a considerable turnover with the United Kingdom. The stock of modern industrial spaces may still have a very accelerated growth rate in the next three years (until 2023), "it is mentioned in a statement of Colliers International .

Exports of goods from Romania to the United Kingdom are almost two thirds higher in absolute value than the exports of services, but the latter have a higher value, as the UK generates about 12% of the external demand for IT services. internal, for example.

Strictly speaking of goods, the United Kingdom is a major destination for various sectors of production (including the auto industry), the textile and agriculture sectors. About 9% of the Romanian car exports go to the UK, with a strong export demand coming from the auto parts segment; In the women's clothing segment, the UK attracts more than a quarter of exports.

"A negative scenario imposed by Brexit could have a significant short-term impact, but it would also have longer-term effects, as global production chains have become even stronger in recent years, and most Romania's big export partners interact strongly with the UK, in the longer term it is quite difficult to say how things will be resolved, although Romania's relatively low wages, the healthy difference between productivity and labor costs and the good connection to markets Western Europe would have serious benefits, "said Laurenciiu Duică, Partner, Head of Industrial Agency at Colliers.

Demand for industrial and logistics spaces increased by about 40% in the first three quarters of 2019, to 306,300 square meters, but this figure is almost 27% lower than the same period in 2017. The year 2019 is still solid overall (including quarter IV).

The domestic industry is already contracting against the background of weakened external demand, with less favorable indicators in the case of the main trading partners of Romania (especially Germany). One of the basic elements of the Romanian industry – its auto sector is likely to feel the impact of global trends, the auto production sector is going to see its first decline in a decade.

Private consumption remains fairly decent in Romania against double-digit year-over-year wage growth, which means that the need for industrial and logistics spaces allocated to the growing retail sector in Romania should remain an engine of growth in 2020. The same will happen with the expansion of e-commerce, which is developing quite rapidly alongside traditional physical operations.

"The industrial and logistical stock will increase considerably over the next three years (until 2023), if infrastructure projects begin to become visible and fiscal policies will not undergo major changes designed to discourage investments in this segment," the statement said.



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