Wednesday, 29 April 2026
Real estate development in Romania is entering a more selective phase, shaped by tighter financing conditions, persistent permitting challenges and evolving tenant expectations. In a CIJ EUROPE Q&A, Mădălina Mitan, Partner at Schoenherr in Romania outlines how these factors are filtering which projects move forward, while also redefining how investors assess risk and structure transactions.
Retail and mixed-use developments continue to attract interest, particularly in a market that remains undersupplied relative to other European countries. Demand is especially visible outside Bucharest, where modern retail formats are still expanding. However, execution conditions have become more demanding. Retail parks and convenience-led schemes remain active, but mixed-use projects are proving more complex to finance and permit, requiring stronger capitalisation and more deliberate structuring.
Financing constraints are playing a central role in reshaping the development landscape. According to Mitan, lenders are requiring higher levels of pre-leasing and are less willing to take on development risk. This has led to a clear divide between well-capitalised developers with established banking relationships and those reliant on higher leverage. The latter group is increasingly forced to reconsider deal structures or delay projects.
In the residential sector, recent legislative changes have added further pressure. The shift away from pre-sale driven financing models is pushing developers towards greater reliance on bank funding or equity. As a result, legal advisers are seeing a rise in restructurings, joint ventures and forward purchase agreements as market participants seek alternative routes to project viability.
Permitting remains one of the most significant and often underestimated risks in the Romanian market. While the legal framework itself is considered functional, the capacity and consistency of local authorities vary widely. Bucharest continues to present the most complex environment, with ongoing uncertainty linked to suspended or annulled urban planning documentation affecting development timelines and investment decisions. In response, developers are adapting by targeting already permitted sites, phasing projects around existing approvals or pursuing administrative litigation.
Regional cities offer a more mixed picture. Some locations have developed more predictable administrative processes, while others face similar institutional constraints to the capital. This variability is reinforcing the need for project-specific risk assessment, with permitting increasingly treated on par with financial considerations.
At the same time, investor strategies are evolving. Diversification is being driven both by long-term structural trends and by adjustments within traditional sectors. Logistics and industrial assets continue to benefit from strong underlying demand linked to e-commerce and nearshoring, while interest in build-to-rent is growing despite the need for further regulatory and transactional development. Weakness in the office sector has also encouraged investors to explore alternative asset classes.
Tenant expectations are also reshaping development and leasing strategies. Demand for experiential retail, including food, leisure and wellness components, is now seen as a baseline requirement rather than a differentiator. Lease structures are becoming more flexible, with shorter terms, break options and turnover-linked rents increasingly common. At the same time, ESG considerations are moving into the core of lease negotiations, with sustainability obligations becoming standard, particularly among international occupiers.
Looking ahead, the next 6 to 12 months are expected to remain selective. Projects with secured permitting, committed tenants, structured financing and strong sponsors are most likely to proceed. Regional retail parks and upgrades to existing assets appear best positioned in the near term, while developments in Bucharest affected by planning uncertainty and residential schemes yet to adapt to new financing realities may face delays.
Reflecting on the broader evolution of the market, Mitan notes that the legal and transactional environment has undergone a significant transformation over the past three decades. From early challenges related to property rights and restitution, the market has developed into one that now handles complex financing structures, ESG-linked agreements and cross-border investment flows. While institutional inconsistencies and regulatory unpredictability remain, they are increasingly understood and managed by experienced market participants.
The current cycle, she suggests, is not halting development but refining it. As financing, permitting and operational requirements become more stringent, the market is shifting towards projects that are robust from the outset, both legally and financially.
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