no. 1 Market Beat 2016 KEYNOTE

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2 KEYNOTE 02 The new residential boom. This is how 2015 was described for the local residential market and the statistics confirmed: not only that the market has recovered but in many cities in Romania, including Bucharest, peaks recorded during the period were topped. While the office and retail segments drew the attention of investors in 2013 and 2014, last year was marked by significant investments in residential projects. The stabilization of prices, the return of confidence of potential buyers and significantly improvement of financing conditions and offers led more and more investors to (re) start projects that put on the market an offer much better adapted to current demand. The new residential boom is very different from what happened before the onset of the economic crisis. End buyers have completed over 95% of transactions last year, compared to , when the largest share was held by investors seeking a profit through resale. This shows a healthy market. Furthermore, the purchase of a new house has become more affordable, a person with an average income being required a period of less than 10 years, or less than 120 wages to buy a one-bedroom apartment in Bucharest, according to the Coldwell Banker Affiliates of Romania Index on the affordability of purchasing a new home. In full boom, before 2008, it was required nearly 400 wages, nearly 33 years! began under uncertainty, talks about the potential effects of the debt discharge law (datio in solutum) and the continuation of Prima Casa program calling maybe into question the viability of an investment in a residential project development. Extremely high current rates of absorption, of over 75% in Bucharest and even over 90% in some large citites in the country can, at least for now, partially remove these fears. Real estate arm of IKEA or Liebrecht & Wood are just two of the international names that recently announced plans for residential projects with thousands of homes that will extend over more than five - seven years. If investment plans are carried out thoroughly, if the project draft is well adapted to the target and the marketing and sales strategy is drawn up and implemented with the help of professionals with real experience, I strongly recommend a potential investor to turn its attention towards the local residential segment. I wish you a pleasant reading of the Market Beat study regarding the residential market in Romania in and please take into consideration we are available for custom analysis and market studies on targeted segments. +15 residential projects in portfolio Coldwell Banker Affiliates of Romania no. 1 Romanian real estate consulting company in 2009 according to yearly financial results apartments sold in 2015 All the best, Valentin Ilie, CEO Coldwell Banker Affiliates of Romania

3 Content Macroeconomics Bucharest Regional markets Center... West... South... East

4 MACROECONOMICS Extract data... /Run

5 05 ROMANIA ECONOMIC REVIEW Paul Ichim Executive Vice-President Export-Import Bank of Romania EximBank In 2015, the Romanian economy grew by a solid 3.8%, posting one of the highest real growth rates in the EU. The economy s robust growth was driven by a surge in domestic demand, with household consumption increasing by 6% yoy (contributing 3.9 p.p. to real GDP growth), and a much-needed rebound in investment, with gross fixed capital fomation increasing by 8% yoy (thus adding 1.8 p.p. to real growth). Domestic demand benefitted greatly from the increase in households real disposable income, mainly due to wage increases and fiscal stimuli (e.g., a cut in the VAT rate applicable to food products from 24% to 9% starting June 2015), as well as the plunge in oil prices. Government consumption contributed 0.5 p.p. to real GDP growth, while net exports shaved off 2.5 p.p. of real GDP, mainly due to weak demand from the EU, Romania s main trading partner, and a hike in imports (9% yoy growth) due to high domestic demand. Romania s weak export dynamics is somewhat surprising in the context of the leu s relative stability, both in nominal in real terms. We expect the Romanian economy to grow by 4% in on the back of strong domestic demand, further supported by the reduction of the VAT rate from 24% to 20% starting January and low oil prices, and the positive trend in investment. In the current context of low yields and excess liquidity in the markets, it is likely that some of these funds will be directed towards productive investments, with positive effects on both actual and potential growth. At the same time, we expect significantly improved performance from exports (as the economic sentiment rebounds in Romania s main trading partners) and agriculture (in terms of agricultural output, 2015 was the worst year since 2012) F Real GDP (yoy) Potential GDP (yoy) Output gap Nominal GDP (bn EUR) Headline inflation * Private consumption (yoy) Govt consumption (yoy) Total investment**** (yoy) Current account (%GDP) Budget deficit (ESA) ** Structural deficit ** EUR/RON avg RON REER*** ** Unemployment rate ** MACRO ECONO Source: Eurostat, AMECO, NBR. Note: Forecasts are provided by EximBank, except *) NBR forecasts MICS and **) European Commission forecasts; ***) Real effective exchange rate vs. 36 industrial countries, provided by the European Commission; ****) Measured by gross fixed capital formation.

6 06 ROMANIA ECONOMIC REVIEW However, it should be noted that there are several risks that could hinder economic growth in. The slowdown in industrial output and exports, in spite of contained unit labour costs, highlights the urgent need for measures on the supply side of the economy, such as investment and other measures aimed at increasing productivity, non-cost competitiveness and making the business environment more investor-friendly (acording to The World Bank s Ease of Doing Business report, Romania ranks 37th out of 189 countries). 37 th Romania s rank in The World Bank Ease of Doing Business report Pro-cyclical policy measures, aimed at stimulating demand in the context of a positive output gap, put Romania s hard-won gains in terms of budget consolidation at risk. These measures include cuts in the VAT for food (from 24% to 9% as of June 2015), two successive VAT cuts (from 24% to 20% starting January and from 20% to 19% as of January 2017), a reduction in the tax on dividends from 16% to 5%, as well as eliminating the special construction tax and extra excise duty on fuel starting At the same time, the uncertainty surrounding some proposed legislative measures (most notably the draft law on the discharge of debt obligations arising from credit contracts by transferring the immovable property to the creditor) poses significant risks to the economy and financial stability, as well as to the provision of credit to the real economy, as acknowledged by NBR. Another signifincant risk stems from potentially deteriorating investor confidence due to the uncertainties surrounding growth in emerging economies. This is especially true in the context of the projected slowdown of the Chinese economy, as well as weak expected growth in the EU. Nonetheless, the current monetary policy divergence among the world s main central banks might increase the volatility of capital flows in emerging markets, thus threatening the recent positive trend in FDI in the Romanian economy. Other risks that might take their toll on investor confidence are the current immigration crisis in Europe, the risk of Great Britain leaving the EU and the protracted crisis of the Greek banking sector; however, these risks are expected to have a limited impact on the Romanian economy. The recent developments in fiscal policy also highlight an important risk to Romania s growth. MACRO ECONO MICS

7 07 ROMANIA ECONOMIC REVIEW Corroborated with spending increases (i.e., public sector wages and expected pension increases) and taking into account the fact that is an election year, Romania s (ESA) budget deficit is expected to hover around 3% of GDP in and 4% in 2017, which implies a significant deviation from the Medium-Term Objective (structural deficit of 1%), thus triggering the Excessive Deficit Procedure. At the same time, Romania s public debt is expected to gradually rise towards 40% of GDP by 2017 and above 60% by 2026, which threatens the sustainability of public finances in the long-run. 40% Romania s public debt of GDP in 2017 (estimation) computed by Eurostat, which registered values above 2% in the last two months of 2015 and the first two months of. In this context, we expect the inflation rate to be back in the NBR s target interval in 2017, in spite of the additional VAT cut from 20% to 19%. The gap between the growth rates of exports and imports in 2015 led to a widening of the current account deficit, estimated to amount to 1.1% of GDP. This is projected to continue as the strong domestic demand will likely lead to higher imports; as such, we forecast a current account balance of minus 1.5% of GDP as of end-. At the same time, Romania continues to register modest inflows of foreign direct investment: net FDI inflows in 2015 amounted 2.8 bn EUR, or roughly 2% of GDP. On a positive note, Romania s improving net international investment position (from 57.4% of GDP as of end-2014 to an estimated 51.4% as of end-2015), thus improving the external sustainability of the economy. Inflation has exhibited a clear downward trend over the past three years, hitting all-time lows in 2015, well outside the central bank s target of 2.5 +/- 1 p.p. This is mainly due to plunging oil prices and the reduction in VAT for food products discussed above, with the outlook for being heavily influenced by the further cut in VAT from 24% to 20% for all goods and services starting January 1st. It must be pointed out that given the current positive output gap (excess demand) and excluding the transitory effect of the decrease in taxation, the economy is witnessing inflationary pressures, as shown by the HICP at constant tax rates MACRO ECONO MICS

8 08 ROMANIA ECONOMIC REVIEW The labour market was largely stable in 2015, with the unemployment rate decreasing only slightly to 6.7%, one of the lowest among its peers. However, it must be stressed that Romania is facing a constant decline in its working-age population as result of ageing and net migration abroad, which means that it is imperative that the authorities accelerate education and labour market reforms, as well as support the business environment in creating jobs for high skilled workers. At the same time, the minimum wage increased to RON 1,050 since July 2015, with a further increase to RON 1,250 being planned for May 1st,. Monetary policy was extremely accommodative throughout 2015, with the NBR operating four 25 bps cuts in the policy rate, from 2.50% to 1.75%, as well as narrowing the corridor for its lending and deposit facilities to +/- 1.5 p.p. from from +/ p.p. This measure is aimed at enhancing the transmission of monetary policy, which is also supported by the increase in the RONdenominated share of bank loans relative to the total outstanding amounts (as of end-2015, RON loans amount for more than half of the entire credit market). RON 1250 Minimum wage estimated at May 1st However, given the current inflationary pressures (excluding transitory VAT effects, as discussed above) and the likely overheating of the Romanian economy (positive and rapidly widening output gap, relatively low potential growth due to low investment and weak progress in structural reforms), we cannot rule out a bps increase in the NBR policy rate towards the end of. In this policy context, financing costs decreased significantly during 2015 and banks granted new loans amounting to approx. 53 bn RON, out of which 49 bn RON denominated in local currency. New bank loans to households amounted to approx. 26 bn RON, out of which 25 bn were RONdenominated loans; housing loans amounted to just over 10 bn RON, which represents a 57% increase over However, the lending and housing markets face a serious threat from the draft law on debt discharge (datio in solutum) which, if passed in its current form (i.e., with retroactive application, inter alia), will have two major negative effects: (i) significant disruptions in retail lending due to substantially increased down payments (up to 35 40% of the property s value), lower maturities (by up to 10 years) and increased costs/financial burden to debtors, and (ii) a sharp drop in the prices of real estate. According to NBR estimates 1 he number of years necessary to raise the required down payment under the new conditions increases to 7.9 years from 1.3 years in the case of a Prima Casa Loan (5% down payment) and 3.8 years in the case of a regular mortgage loan (15% down payment). MACRO At the same time, NBR predicts an average increase of 44% in the monthly installments for a RON-denominated housing loan (42% in the case of a EUR-denominated loan) 2. ECONO 1 Considering a household comprising two average-income earning members and a savings rate of 25% and a property priced at 60,000 EUR (-10% under the new conditions) for which a 35% down payment is required. 2 Assuming a median-value mortgage loan, a 150 bps increase in the applicable interest rate and a 10-year reduction of the maturity of the loan. MICS

9 09 With more than 11,000 units finalized in Bucharest and in the surrounding areas and a little over 47,000 new houses finalized nationwide, 2015 marked the recovery of the local residential market, as several regional markets, such as the ones of Bucharest, Brașov, Cluj Napoca, Constanța, Sibiu or Timișoara, recorded a greater number of deliveries compared to the market peak. CONTEXT At the beginning of this year, the affordability index in what concerns the purchase of a new home, calculated by Coldwell Banker, reached an all-time low in the modern history of the local residential market Number of years necessary for buying a one bedroom new apartment in Bucharest with an 50 usable area of 50 sqm +10,4% units completed approx. Prima Casa mortgages since Best year for the local residential market +8% number of transactions 32, ,8 15,8 15,8 14,5 13,3 11,6 9, ian.-08 ian.-09 ian.-10 ian.-11 ian.-12 ian.-13 ian.-14 ian.-15 ian.-16 Source: Coldwell Banker Affiliates of Romania, NIS, NBR The improvement of credit terms, by successive reductions in bank interest rates and policy rate, which directly impacts the costs of the funding granted under the Prima Casa (First Home) program, and wage increases, both in private and state companies, resulted in an ever growing number of persons for whom the purchase of a new home became affordable. Therefore, it now takes any person less than ten years to purchase a one bedroom apartment, given that net average wage and the average square meter price of a new home, compared to almost 33 years at the beginning of 2008.

10 + % 75 Absorption degree in Bucharest in 2015 CONTEXT On this background, developers have accelerated investments in the residential area and have either started a great number of new projects or new stages in existing residential complexes or projects which were put on hold at the beginning of the economic crisis, being motivated by the good absorption rates, of over 70%, before the completion of the construction, for the projects which are well adapted to the existing demand. The number of transactions concluded last year increased nationwide by about 8%, compared to 2014, over 95% of the transactions being concluded by end users, compared to when the most of the transactions were concluded by investors seeking a quick profit by resale. Market Research 010 started off with an explosive increase of the purchases performed by means of Prima Casa program, on the background of the Datio in Payment law, and a slight increase in the prices on certain regional markets, on the background of a relatively low offer. The stock of new homes which will made available on the market this year by developers will most probably be easily absorbed by the current demand, provided the funding terms remain as relaxed as they currently are, although not all the developers will obtain the expected results, and more and more schemes and means of funding buyers will appear on the medium term. In 2015 the decrease in bank interest rates resulted in the resurfacing of investment transactions, the annual yield in Euros ranging on average between 5% and 7% but likely to go as high as 9% depending on the project and the market segment, such yields being much higher than those provided by bank deposits.

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12 012 Offer While 2015 was the best year in the history of the residential market of Bucharest and the surrounding areas, with over 11,000 new homes delivered to their buyers, exceeding the level recorded during the market peak, promises to set new records, at least in terms of completed units. BUCHAREST sales being recorded for most of the projects during the construction works stage, in many cases the buildings being fully sold to the buyers before the final acceptance date. + % 25 Increase in delivered units in Number of units delivered in Bucharest Source: (est.) The data of Coldwell Banker Affiliates of Romania shows that over 14,000 units will be delivered this year by the developers, i.e.a year over year increase of over 25%. The good funding terms, the stabilization of the prices and the fact that the developers have adapted to the existent demand better and better resulted in an extremely high degree of absorption of over 75% last year, significant NIC, Coldwell Banker Affiliates of Romania Given that the homes of the projects completed before 2014 are in their turn gradually absorbed by the market, even if at a slower pace, we estimate that, under the current market conditions, the total stock of homes for sale in residential complexes will reach approximately 8,500 units at the end of this year, down by 35% compared to the beginning of this year. BU CHA REST

13 53,5% Mass market units BUCHAREST Most of them are projects completed before the recovery of the residential market, projects which will probably be sold in full during the following years, depending on the adopted price strategies, while the new supply of homes made available on the market this year will probably be absorbed at a pace similar to that of The good sale rate recorded by the developers of the current projects is mainly due to a very high level of adjustment to the demand. Therefore, 53.5% of the units to be delivered this year can be classified as mass market units, a market segment where the purchases made by means of Prima Casa program account for an overwhelming ratio of over 70%, depending on the project. These projects provide affordable houses, with a good location in terms of interest points such as shopping areas or access to the public means of transport and surfaces similar to those of the old houses. Market Research 013 Approximately 12.3% of the total number of units to be delivered this year or nearly a fifth of the mass market category are low market units, namely projects with smaller areas compared to those of the homes built before 1990 which are located on the outskirts of the city, without direct access to public means of transport, without general facilities within the projects and with a relatively low quality of the construction. On the middle market segment over 5,500 houses dedicated to the middle class will be completed this year in Bucharest, in semi-central areas, in the northern part of the city or in large neighborhoods which ensure an easy access to the public transport network especially to the subway and to points of interest, such as shopping areas or parks. Low Market Euro / sqm Mass Market Euro / sqm Middle Market Euro / sqm High Market Euro / sqm Segmentation of residential market in Bucharest Source: Coldwell Banker Affiliates of Romania

14 BUCHAREST The reviving of the middle market segment also materialized by the emergence of new residential development poles, such as centerwestern area, Barbu Văcărescu Aviației or Văcărești Tineretului Park area West Central / semicentral Premium units to be delivered in The increase in the demand of the potential buyers resulted in a continuous development of integrated concept residential projects, providing a series of facilities and where communities of thousands of persons have already been established, being true capital suburbs North South The increase of the purchasing power also led to the development of the premium homes segment, mainly characterized by a very good location and by higher quality surfaces and finishing works, over 1000 premium and luxury units being expected to be completed this year in Bucharest. The boom of the residential market and the development of the middle market segment marked the launch of new projects in almost all parts of the city, after the southern and the western part of Bucharest were favorites end for the development of residential complexes for years on. Most of the 14,000 homes to be completed in are located in the western area (22.70%), followed by the northern area (22.30%) and the southern area (21.30%) Almost 3000 houses will be completed this year in the semi-central and central areas of Bucharest while about 2000 new homes will be delivered this year in the eastern area, which will become one of the main development poles of the residential segment the years to come. East Area segmentation of units under construction in Bucharest Source: Coldwell Banker Affiliates of Romania BU CHA REST

15 015 BUCHAREST Demand and Prices Due to the great number of sales contracted from the construction stages and the partial absorption of the homes completed before 2014, the transactions volume recorded last year on the residential market of Bucharest and the surrounding areas reached an all-times high of more than 10,000 new homes transactions, purchased almost entirely for residential purposes, which practically marks the return of the confidence in the residential market. Most transactions are still concluded by means of Prima Casa program, whose main advantage consists in the low down payment, although several financial institutions launched standard crediting offers with interests similar to those of the government program. Over 10,000 transaction closed last year in Bucharest Source: Coldwell Banker Affiliates of Romania The buyers on the mass market segment are usually young families, who find themselves at the beginning of their professional career, for whom the home to be purchased is their first, who earn less than EUR 1,300 per month per family and who want a newly built home and not one built before 1990, even if such new home is located in big neighborhoods or at the outskirts of the city, the purchase price and the access to the public transport network being the key decision maker. The increase of the income and the general increase of the population consumption, in conjunction with the improvement of the crediting offers and of the macroeconomic expectations resulted in the increase of the demand on the middle market segment, where the number of transactions made by means of Prima Casa program accounts for a third of the total number of transactions, the buyers being usually persons who are looking for a home upgrade. The demand on this segment consists of buyers or families whose monthly average income exceeds EUR 1,500, the price not being the only decision maker, the location, finishing works or facilities also having a significant weight. Given that over 1,000 units are to be completed this year, the premium segment will also record good absorption rates from persons with a household income of over EUR 4,000 and who postponed the purchase of a home due to the low number of new offers. Prices remained relatively stable throughout 2015, although they registered slight increases on certain market segments and in certain areas as a result of a demand higher than the offer. The transaction prices of the mass market segment normally range between EUR per useful square meter, while the average trading prices on the middle market segment range between EUR 1,200 1,400 per useful square meter. BU CHA REST

16 016 BUCHAREST Old Market In, the transactions with old properties will continue to account for most of the total transactions concluded in Bucharest in the residential segment, their main advantage compared to the new properties being their good location and the easy access to the points of social interest, such as educational institutions, shopping centers or leisure places. Due to the development of the middle market segment, more and more new homes were built in Housing Price Index for two bedroom apartments in Bucharest build between attractive areas, which led to a decrease in the number of the transactions with old apartments compared to the previous year. We estimate that a new house is a valid option for a potential buyer if its sale price does not exceed by 20% the price of an old house located in the same area. The buyers are willing to pay the price difference for an increased comfort and for the opportunity of not purchasing a 35 years old house. The trading prices on this segment have increased slightly during the last 12 months, following the return of the confidence in the residential market, and on the background of the current market conditions. No significant changes are expected during the following six months in this respect BU CHA 0 Oct. 08 Mai 11 Sept. 11 Ian. 12 Mai 12 Sept. 12 Source: Housing Price Index calculated by Ziarul Financiar and Coldwell Banker Affiliates of Romania Ian. 13 Mai 13 Sept. 13 Ian. 14 Mai 14 Sept. 14 Ian. 15 Mai 15 Sept. 15 Ian. 16 REST

17 017 BUCHAREST Forecast will be marked substantially by the changes in the Tax Law, while the Datio in Payment Law will also have a certain impact on the funding segment and implicitly on the residential market. Nevertheless, the investors and bank institutions will seek and implement new funding solutions for the potential buyers, taking into account the creditworthiness of the existing demand, by reference to the average income and trading prices. The share of the middle market segment will continue to increase in the coming period. This will happen due to the expected income increase and the fact that more and more persons who purchased a house by means of Prima Casa program at the beginning of the program, will be able to sell it and upgrade to a new house with a better location and with higher quality finishing works. The large areas of land available in areas such as Barbu Văcărescu, Regie, Theodor Pallady, Expoziției or Sisești will continue to be of interest for the residential projects developers, and therefore we expect an increase in the number of units to be completed in these areas during the following years. Given the current market conditions, the homes which will be completed this year will most probably find their buyers. However, there will be developers who will not record the expected results, mainly because of the non existing demand. Meanwhile, there are already developers who have a more than six months delay in delivering announced projects. BU CHA REST

18 Analyse multiple data... Regional markets /Merged

19 CENTER 019 Cluj Napoca Cluj Napoca is considered the second residential market after Bucharest, due to the high number of residential projects completed during the last few years but also due to the price increases of the last 15 months. Constructions in the residential area boomed, driven by the current high demand coming from young people who are high education graduates of Cluj Napoca or working in one of the multinationals which opened an office in the city during the last few years, the estimated number of corporate employees being over 20,000 people. Approximately 2,300 new units will be completed this year in the city, up by nearly 50% compared to 2014, according to the data provided by Coldwell Banker Transilvania. Most of these units are part of the mass and middle market segment, in projects such as Bonjour, Contemporano, Platinia or Sophia, but the premium segment has also developed significantly, Riviera Luxury Residence being completed in The residential projects of Cluj Napoca will be supplemented by the ones of Floreşti, where we estimate that approximately 1,500 new units, all in the low market segment, will be completed this year. The degree of absorption was of about 95% in 2015, which is one of the reasons why the prices of new homes of Cluj- Napoca increased by over 10% during the last nine months. We estimate that this high degree of absorption will continue in, depending on the developments in the funding conditions, while prices will no longer have any reason to go up. Cluj Napoca will remain one of the main residential markets of Romania, due to the foreign investments in the area but also due to the population migration, Cluj Napoca attracting tens of thousands of students annually. In the medium term, new residential development poles will appear, such as the area of Parcul Feroviarilor, which benefits from a public project for the rehabilitation of the urban infrastructure, or Colonia Sopor, which has a great location and large available plots of land. Units delivered in Cluj Napoca between Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation * * 100 Absorption of units delivered in 2015 % CEN TER

20 CENTER 020 Brașov 2015 can be considered the comeback year for the residential market of the city at the foot of Tampa mountain, with over 1,500 units sold in projects such as Avantgarden, Isaran or Sanpetru Residence, up by 50% compared to the previous year. The degree of absorption rose to almost 100%, as the homes that were completed the previous year and that have not been sold so far will be absorbed in the near future. The recovery of the residential market also marked the revival of the interest in the investment segment, with buyers who purchased a home for leasing purposes, the annual yield in Euros being of approximately 6.5%. The foreign investments undertaken in the area by Ina Schaeffler, Draxlmaier, Stabilus or Immochan as well as the medium-term attractiveness of the city for new investments in the industrial segment will keep Brasov in the range of interest of developers of residential projects. 6,5 Potential annual renting yield % Residential developers of Braşov currently have about 1,750 homes in progress, with delivery terms in. Units delivered in Brașov between * Prices will remain stable during the following period, the price prices ranging between EUR 650 and EUR 750 per usable square meter on the low market segment, between EUR 750 and EUR 900 per usable square meter on the middle market segment and between EUR 950 and EUR 1,250 euro per useful square meter on the premium segment, luxury homes being sold for an average price of EUR 1,500 / usable sq.m CEN 283 Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation TER * 2015

21 021 Sibiu Sibiu has lately been the largest residential development market, together with Cluj Napoca, the data provided by Coldwell Banker showing that more than 2,000 new homes were completed last year in the city At this time around 3,500 new units are in various stages of development being scheduled for delivery in, if the developers meet the announced deadlines. The Vest-Turnisor area has been a residential complexes construction pole, as several projects are currently in progress which include from a few tens of units to over 1000 units. All these will be supplemented by a few more hundreds of apartments in projects such as Alma, Belvedere or Magnolia Residential Complexes. The prices of a new apartment one-bedroom apartment in Sibiu range between EUR 30,000 and EUR 50,000, depending on the market segment they belong to, while houses are sold for prices that start at EUR 85,000. By comparison, old one-bedroom apartments sell for prices ranging between EUR 30,000 and EUR 45,000, depending on their location. The absorption rate of the new recently competed homes has been very high, Sibiu being characterized by an economic effervescence, as the investments made by the German companies in the area, such as Continental and Marquardt Schaltsysteme, but also other companies in different business areas (Ambient, Polisano, Compa etc.), resulted in the development of a group of good solvency buyers. CENTER Bistrița The data of Coldwell Banker shows that a low number of homes located in residential complexes was made available in Bistrita in 2015, while approximately 270 units will be finalized in, most of them being located in areas such as Libertății, Sub Cetate and Crinilor. Prices remained relatively stable throughout, as new onebedroom apartments sell for prices ranging between EUR 25,000 and EUR 45,000, depending on their location, while new houses sell for prices that start at EUR 55,000. Units delivered in Bistrița between Deva * * units were delivered in Deva during the last two years, new one-bedroom apartments selling for prices ranging between EUR 40,000 and EUR 48,000, compared to EUR 25,000 EUR 35,000 for similar old apartments. The data provided by Coldwell Banker shows that approximately 100 units will be delivered this year in Deva, in Grigorescu neighborhood Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation ,500 Units delivered in Sibiu in CEN TER

22 CENTER 022 Târgu-Mureș About 200 new residential units will be completed this year in Targu-Mures, compared with approximately 250 the previous year, according to the data provided by Coldwell Banker. The most important development area in the city is Tudor neighborhood, followed by the Cantemir area. Prices of new one-bedroom apartments range between EUR 38,000 and EUR 55,000, compared to the prices for similar old apartments which range between EUR 30,000 and EUR 45,000, while new houses sell for prices that start at EUR 100,000. Units delivered in Târgu-Mureș between Miercurea Ciuc Miercurea Ciuc is also one of the local residential markets where only a few tens of units are completed annually, according to the National Institute for Statistics. Prices of new apartments range between EUR 650 and EUR 850 per square meter, while old apartments sell for prices which are up to 50% lower. Sfântu Gheorghe Sfantu George is also one of the poorest county capital cities of Romania in terms of newly developed residential complexes, as between 40 and 50 homes are built on average annually from private funds Units delivered in Târgu Mureș in * 210* Alba Iulia Zalău Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation Zalau, the capital city of Salaj County, has one of the lowest residential markets in the central area of the country, with only a few tens of units scheduled to be completed this year. Prices of old one-bedroom apartments range between EUR 20,000 and EUR 35,000, while new ones sell for prices starting at EUR 50, About 200 units located in residential projects will be completed this year in Alba, down from approximately 270 units in each of the past three years. New one-bedroom apartments sell for prices ranging between EUR 35,000 and EUR 45,000, the most important development area being Cetate area. Units delivered in Alba Iulia between Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation * 190* CEN TER

23 023 Timișoara During the last few years the biggest local real estate market in the western part of the country was the scene of major investments in the office and commercial spaces segment, the residential segment being targeted by the investors only recently. The data provided by Coldwell Banker shows that approximately 1,000 units located in residential complexes are currently in progress in Timisoara, compared to 2015 when about 650 units were completed in the city, the most important projects being Venus, Uranus or Adora Forest. Timisoara will experience an exponential growth in the residential segment during the coming years, as large-scale projects such as City of Mara have already been announced. Arad About 600 homes were completed last year in Arad, up by over 30% compared to 2015, according to the data provided by Coldwell Banker. And approximately 200 more units are planned to be completed by Ared in. In terms of prices, new one-bedroom apartments, located in the center of Arad, currently sell for prices ranging between EUR 42,000 and EUR 48,000, while the average price for houses ranges between EUR 40,000 and EUR 62,000. WEST Oradea Last year, the capital city of Bihor county was one of the most important residential markets in the western part of the country, with approximately 500 completed units. The local investments which will be made by Eberspacher or Faist Mekatronic will generate nearly 1,000 new jobs, an upward trend being recorded for the local economy during the last few years. is expected to be similar in terms of the residential segment of the local market, as several hundreds of units will be delivered from several projects such as Ioșia, Prima or A-Red. Sale prices range between EUR 42,000 and EUR 48,000 for one- bedroom apartments located in the central area and between EUR 32,000 and EUR 39,000 for one- bedroom apartments located in the semi central area, while house prices start at EUR 45,000. Satu Mare About 150 residential units were completed last year in Satu Mare, up by 50% compared to last year, by Davilas, Zirmer-Bud and Austria Invest. New one-bedroom apartments sell for prices which range between EUR 30,000 and EUR 34,000 while houses sell for prices that start at EUR 40,000. Baia Mare The capital city of Maramures county is the smallest residential market in the western part of the country, with about 100 units completed annually, according to the INS data. However, new one-bedroom apartments sell for prices which are slightly higher than those of Satu Mare i.e. EUR 32,000 EUR 38,000 in the central area and EUR 26,000 - EUR 30,000 for one- bedroom apartments located in the semi-central area. Units delivered between * * Timișoara Arad Oradea Satu Mare Baia Mare Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation VEST

24 024 Background Most of the county capital cities in the southern part of Romania have small residential markets with only a few tens of units completed annually, the lowest national values being recorded in Resita and Tulcea, where less than 15 homes were completed in 2014, according to the INS data. Craiova Craiova is the largest residential market in the south-western part of Romania, with more than 500 units completed last year, according to estimates of Coldwell Banker. The most important projects developed in the city during the last few years or currently in progress include Magnolia, Safta Residence, Bujorului Residence or Satul German. The cheapest one-bedroom apartments are found in Craioviţa and Corniţoiu areas, where the average price per square meter is EUR 750, while the prices of the apartments in Bujorului Residence for example go as high as EUR 1,000 per square meter. The average term development potential will remain high due to the investments announced by Ford or other companies such as ETI, one of the largest food companies in Turkey. SOUTH Pitești The capital city of Arges county has one of the most dynamic residential markets in the southern part of Romania, with over 500 residential units planned for development in Furthermore, we estimate that the city will experience a significant development on the offices spaces segment. The average prices on the new apartments segment range between EUR 700 and EUR 1,000 per square meter, the trend being one of stabilization. Ploiești Being one of the main residential markets in Muntenia and due to its proximity to Bucharest, Ploiesti attracted major investment from developers also present in Bucharest, such as Adama, Irish Park or Mica Romă being two of the most important complexes. Sales prices for new one-bedroom apartments range between EUR 38,000 and EUR 47,000, compared to similar old homes which sell for prices that start at EUR 29,000 and can go as high as EUR 44,000. Constanța This seaside city has the largest residential market in the southern part of Romania, after Bucharest, with more than 2,000 units completed annually according to the data provided by Coldwell Banker Affiliates of Romania. Apartments sell for prices which range between EUR 650 and EUR 900 per usable square meter, while houses sell for prices which start at EUR 250 per usable square meter. Units delivered between * * Craiova Pitesti Ploiești Constanța Source: NIS, Coldwell Banker Affiliates of Romania; * Coldwell Banker Affiliates of Romania estimation SUD

25 025 Background According to the INS data, the eastern region of Romania is a small sized residential market, only a few tens of units being finalized in all county capitals cities annually, except for Iasi, Bacau and Suceava. EST Suceava Suceava is the most developed market of the northeastern region of Romania, with approximately units finalized annually in residential projects. The average prices per square meter start at EUR 700 and can go as high as EUR 900. Iași The traditional capital city of Moldova region is also the most developed regional market, with approximately 1,400 units in development in the city this year, up 40% compared to the previous year, according to the data provided by Coldwell Banker Affiliates of Romania. The flow of students, the investments made by the IT and services companies but also the offices spaces and retail projects made Iasi ever more attractive for the developers of residential projects, projects such as Lazăr Residence, Concept Residence, Newtown Residence and Lake District being currently in progress. Sale prices per square meter start at EUR 1,250 for the new apartments located in central areas and at EUR 900 for new apartments located in semi-central areas, while old apartments have prices that are up to 25% lower. EST

26 Coldwell 026 Banker 3, ,000 Offices Countries bn. $ in sales volume brokers Coldwell Banker Affiliates of Romania

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