Real Estate Market Updates Romania



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SIGNS OF THE TIMES – Real Estate Market in Romania

Real estate goes back to basics November 2011
Major investment in real estate developments and shopping centres April 11, 2008
Real estate consultancies’ fees to reach 100m euros February 29, 2008
Construction work rhythm places Romania 5th in the EU
August 7, 2007
450 MN euros worth project in Bucharest commercial center
May 10, 2007
350 MN euros for industrial park in Brasov
April 5, 2007
Bucharest Real Estate Space Boom
April 17, 2006
Real estate investments in Romania are dropping
March 10, 2006
44% more office space in 2006
January 30, 2006
Bucharest Land market slows down
December 20, 2005
Euro Habitat develops residential area
November 10, 2005
Local real estate market still immature, realtor says
November 10, 2005
Land prices to stabilize nationwide
October 12, 2005
As EU date nears, Bucharest shakes off a drab image May 6, 2005

Major investment in real estate developments and shopping centres coming next week
Nine O’Clock April 11, 2008

Floreasca City by Raiffeisen Evolution

Raiffeisen Evolution real estate developer, a division of Austrian financial group Raiffeisen, is launching, on Wednesday, its mixed Floreasca City project in northern Bucharest, an investment of EUR 200–250 M.

The project will consist of a mall – the Promenade Mall – an office tower about 130 in height – the Sky Tower, the highest office building in Bucharest – and a second office building.

The Promenade Mall could be the second mall in the north of the Capital, following Baneasa Shopping City – the largest shopping centre in Bucharest and in the country to be launched this week.

Since the end of 2007, Raiffeisen Evolution, is also the owner of 11 hectares in the Straulesti area, purchased from Petrom for EUR 90 M, where it is planning to develop a large-scale project. On the other hand, Raiffeisen Evolution is the developer of the Oracle Tower in northern Bucharest sold for EUR 20 M to insurance company Unique, in 2005.

InCity Residences showroom opening

Anchor Group is opening, on Tuesday, the showroom for its InCity Residences residential development. Anchor Group is among the lead developers in Romania.

With an investment volume of EUR 340 M in finalised or planned projects, Anchor Group holds vast experience in the development of retail, residential and office projects. Its main accounts are: Bucharest Mall – Romania’s first mall – , Plaza Romania, en of the most popular shopping and leisure destinations in Bucharest – Anchor Plaza – the first class A office building integrated with a shopping centre – and InCity Residences – a residential ensemble situated in the Bucharest city centre. InCity Residences includes 500 apartments with modern architecture and customised interior design and finishings. The construction began in August 2006 and is to be finalised in the latter half of 2008.

Baneasa Shopping City Mall

The Baneasa Shopping City Mall, an inherent part of the Baneasa Commercial Area – is pending official opening on April 18, 2008, according to a press release issued by the developer, Baneasa Developments.

Apart from prominent fashion brands, Baneasa Shopping City is also introducing the country’s first three-floor food court dedicated to the fast food segment, a first floor accommodating restaurants and a second floor dedicated to the club & lounge area. In its last construction phase, Baneasa Shopping City will bring a unique concept to the market – the largest entertainment centre in Romania.

Real estate consultancies’ fees to reach 100m euros
Ziarul Financiar by Catalin Lupoaie, Cristi Moga / 29 Feb 2008


Real estate consultancies have seen their turnover double in recent years, in line with growth on the real estate market, which is why the number of companies that operate in this field has significantly increased. Therefore, real estate giants such as Colliers, CB Richard Ellis, Cushman & Wakefield, Jones Lang LaSalle, DTZ, Coldwell Banker and Atisreal (the real estate arm of BNP Paribas), with global turnovers worth several hundred or even thousands of euros, are already present on the Romanian market, competing with domestic firms such as Euroest, Regatta and Neocasa, Business Construct monthly reveals in its March edition. This year, Andrei Diaconescu, partner at Capital Partners investment firm, believes real estate consultancies’ fees will reach 100m euros.As a result, US-based CB Richard Ellis is set to seal the most important purchase on the market, also considering the fact that its fresh acquisition, Eurisko, targets revenues worth 25m euros this year, a quarter of the entire market. Real estate consultancies’ fees amounted to some 30m euros in 2006, after the market reached around 50m euros last year, and the top two players on the market, Colliers and Eurisko, together generated turnover worth over 30m euros.Whereas the two firms’ positions do not seem to be threatened by any other player for the time being, it remains to be seen how the ranking will look from the third position downwards, after several firms, such as Cushman & Wakefield, DTZ Cornerstone, and Regatta posted revenues worth 3-5m euros. The consultancy services market is very similar to the legal services one and registers spectacular increases year after year. Growth on the two markets is tied to the development of the overall real estate market, considering law firms have also signalled a rising weight of services provided to real estate investors in their overall revenues. Real estate consultancies, operating at a profit margin of around 20% to 50%, have boosted their turnovers in recent years, supported by the domestic market’s transformation into the Central and Eastern European attraction for real estate investors.Romania has become a strategic country for the major providers of real estate services, because “an acquisition on the Romanian market is secure and profitable,” stated Atisreal officials after taking over 80% in Cornerstone International, the former franchise of CB Richard Ellis. Consultants are the most valuable assets of real estate services firms, which has led to significant salary hikes in this field, and also on the legal services market, as a result of the high number of real estate deals.Real estate consultanciesConsultancies have seen their turnover double in recent years, in line with growth rate on the real estate market, a reason why the number of companies operating on the market has increased significantlyFees are expected to reach 100m euros this yearOverall fees revolved around 30m euros in 2006 whilst the market reached around 50m euros last year, after the top 2 players on the market, Colliers and Eurisko, together generated turnover worth over 30m euros

Construction work rhythm places Romania 5th in the EU
Nine O’Clock AUGUST 7, 2005

A significant growth has been taking place over the recent years in constructions. Triggered by an increased living standard, by land retrocession, by the “hunger” for houses in the country, by new lending policies pursued by banks, the construction sector witnesses a steady dynamics, contributing to the GDP growth and, unfortunately, to raising the trade deficit because of imports of construction materials, equipment and accessories.

According to Eurostat, the construction work growth rhythm in Romania is three times faster than the European Union average, and ranks 5th in the EU member country top that is led by Bulgaria. Construction works registered a 29.8 per cent growth in the first quarter of this year in Romania, compared with the same period last year, the 27-state average being of 29.8 per cent. Bulgaria ranks first in the table, with a 62.8 per cent growth. Lithuania, with a 43.5 per cent growth rhythm, Poland with a 51.3 per cent growth and Slovenia with 35.7 per cent also surpassed Romania.

When we refer to this sector of economy, we need to take into consideration several “branches”. There are, on one side, individual constructions, belonging to people who build a house or a villa on their own land. Then it is about the high pace at which super-markets and hyper-markets emerge in Bucharest and in other important cities of the world. One should not overlook the developments in tourist areas, particularly in the mountain areas, which are also growing fast.

Lastly, the big cities, mainly in the outskirts but not only, important district projects are developed, with the participation of famous foreign and Romanian companies. They meet the lodging and upgrading expansion needs, resulting in the establishment of small “cities” around large cities. One should underline that the amplitude of such projects is stimulated, as mentioned, by the increased incomes of certain social categories and by the accessibility of loans from commercial banks. In a few years, both Bucharest and other cities of Romania will have a new “look”, both from an aesthetic viewpoint and in terms of conveniences provided to the new owners.

The way these projects look like, what are the prospects provided by them, what are the facilities provided to clients – these are only a few questions that the current supplement intend to answer to, in an attempt to offer an accurate and ample image of existent projects. Naturally, the supplement is unable to cover all aspects, but it is a good start in describing immediate projects.

Buyers’ preferences in terms of new housing units are beginning to crystallise, and developers adjust their supply to the demand. The buzz word is “comfort”; but this is also a matter of convenience. Areas are calculated to meet buyers’ needs, so as to have housing units in new projects available for prices comparable to those in old blocks of flats.

Although every Romanian dreams of an apartment with an inside staircase, in actual fact most buyers of housing units in the new residential complexes choose studios. In many projects, the first and best selling units were one-bedroom apartments. This is owing both to the small price per unit, small area and to the fact that studios are easier to rent or sell.

Real estate experts claim the easiest apartments to sell are the two or three-bedroom ones, with areas ranging from 45 and 60 sq m for the two-room flats and 60-100 sq m for the three-room units, located in areas with easy access to public transportation means.

Developers are already beginning to adjust their supply to the demand in the market. The first effect is the low supply of four-bedroom units. For instance, most projects promoted in this year’s Real Bucharest real estate trade fair only included two and three-room apartments and studios. For those who want to buy a four-room apartment, the only choices are villa complexes or the complexes addressing customers in high-income categories, who can afford larger apartments.

Blocks of flats addressing the middle class will not include large-area flats. Moreover, areas of such units are expected to decrease, according to some experts, given the incomes of the target group on the one hand, and the announced rise in utility prices, on the other hand. The new offer addressing the middle class will settle, in terms of flat area, within values similar to those of old flats, while luxury apartments will vary in size, depending on the concept of the project and of the type of flat (e.g. penthouse). The difference between new and old apartments will not be made by areas, which will be comparable, but rather by the safety level, the finishing quality and the efficient partitioning of the existing space.

450 MN euros worth project in Bucharest commercial center
Hotnews.ro
May 10, 2007

UK developer Modus Properties will invest, along with partner company Nova Imobiliare, some 450 million euros in the construction of a new commercial center in Bucharest, the largest facility of its kind until today.

The complex will measure a total of 162,000 square meters (some 200,000 square yards), but only 52,000 square meters will be opened in the first phase, before the end of 2009.

Beside stores, the complex will include 16 movie theaters, restaurants, pubs, coffee shops, entertainment areas and 8,000 parking spaces. The “Colosseum Shopping Center” will be built in the North – Western edge of Bucharest.

350 MN euros for industrial park in Brasov
Hotnews.ro
April 5, 2007


Spanish developer Graell & Llonch will invest 350 million euros for the construction of an industrial park in the village of Prejmer, Brasov county, a release from the Eurohouse real estate company informs. The park will cover some 87 hectares, in an area where the average price id 65 euros per square meter.

The constructions will add to this price some 360 euros per square meter. The project was tabled for approval in 2005 and has a deadline in 2009.

Dowload pdf brochure:
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Bucharest Real Estate Space Boom
Bucharest Daily News
April 17, 2006


The growth rate of the class A office-space market in Bucharest is superior to that registered in other capitals in Southeastern Europe and the margin might diminish in the coming years, believes Stefan Gheorghiu, director with the Europolis investment fund. Class A office space totals one million square meters (sqm) in Prague, 1.1 million sqm in Budapest and 1.5 million sqm in Warsaw, while Bucharest office spaces total only 250,000 sqm. However, the growth rate of the Bucharest office space market is 50-60 percent, and only 10 percent in other countries, Gheorghiu said. Due to the lack of buildings, investment funds are shifting towards construction, after they initially relied on buying finished projects. The sums paid by investors for the purchase of real estate projects amounted in the last three years to 350 million euros in Romania compared to 2.5 billion euros in the Czech Republic and one billion euros in Hungary. The main concern of investors is the diminishing rate of real estate returns on the Romanian market, which decreased from 12.5 percent to less than eight percent in the last three years.

Rents for high-quality office spaces in Bucharest are approximately 17-18 euros per square meter for complete buildings and pre-renting is done at about 15-16 euros per square meter. These prices are comparable to other capitals in the region.

Real estate investments in Romania are dropping
by Adrian Hamzescu
Bucharest Daily News
MARCH 10, 2006


The real estate investments carried out in the country between 1998 and 2005 are at the lowest level in Central and Eastern Europe excepting Bulgaria, states a study developed by CB Richard Ellis Romania. Thus, the sums spent in Romania account for only three percent out of the total 14.3 billion euros provisioned by investors for the region. “The efficiency rate is dropping fast,” states the study, pointing out that the rate for office buildings decreased from 12 percent at the end of 2004 to 8.5 percent. The office space sector continues to remain dominant on the local real estate market, according to the study.

The rent of office space will remain at 18 to 20 euros per square meter in 2006, while the efficiency of investments will reduce from ten percent to eight or nine percent, analysts from the real estate market have estimated. “We believe rents will stall. There is not enough quality office space and customers will refuse to pay more than in other European countries for less valuable services,” said Regatta Rentals Department Director Mihaela Raducanu. Commercial Department manager Catalina Jigman from Eurisko shares the same opinion.

The main investor in Romania is the Austrian group Immofinanz, which acquired several properties in the Czech Republic, Hungary and Romania. At this point, the main investors on the market are the real estate divisions of large financial institutions, banks, insurers and other multi-nationals.

In early January, British TV station Channel 4 quoting a study carried out by PriceWaterhouseCoopers (PWC), estimated the efficiency rate for real estate investments in Romania over the next ten years at 414 percent. European Union accession was seen as the main factor boosting the economic perspective for real estate investments. Second place in the classification was taken by Poland, which is expected to offer a 393 percent efficiency rate.

Last year, real estate investments in the region totaled 5.8 billion euros, accounting for a 39 percent hike. A third of the sum was invested by five companies.

Since 1998, most of the funds have been allocated to Poland – 40 percent, followed by the Czech Republic and Hungary

44% more office space in 2006
Bucharest Daily News
JANUARY 30, 2006

180,000 square meters of new office space will become available in Bucharest this year, of which 50 percent has already been rented, according to the real-estate company CB Richard Ellis (CBRE). This represents a 44 percent increase in the sector compared with 2005. CBRE analysts say, however, that the figure is less than impressive in comparison with other capital cities in the region, such as Budapest and Warsaw. Realtors believe the new trend on the office space market is the shift in focus from the north and central parts of Bucharest to the east and south. The imbalance between demand and supply will create a climate very favorable to land owners.

Bucharest Land market slows down
Bucharest Daily News
DECEMBER 20, 2005
by Robert Comanoiu

The prices of land plots in Bucharest will continue to grow but at a slower pace than the last few years and only in the areas where the market has not reached its peak, according to real estate agency Regatta. The market is presently expanding beyond the administrative borders of the Capital as the number of plots available in-city is too low to meet the growing demand. “The trend will continue,” said Alexandru Nitescu, Investments-Lands director, Regatta.

According to the company’s representative, the development in the Northern area of Bucharest will continue and the demand will remain constant for the office space projects. However, the secondary areas, such as the Southern zones, are slowly developing and the investors will soon take interest.

A large part of the buyers and investors are being passive, accumulating large surfaces and waiting for higher prices.

The residential sector features the highest growth rate and focuses on the nearby Bucharest cities, such as Otopeni, Corbeanca, Buftea or Voluntari. “The offer for commercial land is decreasing, and old buildings could be demolished to make way for office spaces and hotels,” said Nitescu, adding that the demand on this sector is and will remain high.

The demand for retail network land plots stays constant, as large companies slowed down their expansion in Bucharest and search for opportunities in large cities nationwide.

Most of the activity in the market is focused on the residential and industrial areas. “The land around Bucharest is still trying to meet the demand of the projects,” said Nitescu.

Euro Habitat develops residential area
Bucharest Daily News
NOVEMBER 10, 2005


The company Euro Habitat is to develop a commercial complex in the Doamna Ghica area of Bucharest, which will include more than 1,100 houses. The project’s value will be between 70 and 90 million euros. Company representatives stated that the first stage of the project should end in approximately 16 months. Prices should start from 33,380 euros. “The plans include a residential area, a commercial center, public transportation, a public park and a primary and secondary school”, according to a company statement. The apartments can be purchased through credits totaling up to 95% of the price

Local real estate market still immature, realtor says
Bucharest Daily News
NOVEMBER 10, 2005


The local authorities’ activity in the real estate segment is not satisfactory, although it could bring an important contribution to the market’s development, stated Muller Onofrei, the director of the Industrial Department of Eurisko real estate company. “They do not understand the potential and that it can turn into a motor of the economy,” added the realtor representative during the recent “Biz Days” seminar.

According to Onofrei, the local market is the most immature in the region, taking all sectors into consideration, and has significant potential for growth.

A shortage of buildings on the local market has determined investment funds to become involved in development projects, in contrast to their usual practice of buying already completed projects.

Romania has a real estate market with a high potential for development, but what holds it back is lack of supply, said Adina Paun, an investment broker for Colliers, adding that this is the main reason pushing investors to team up for the construction of office buildings.

A low supply of class A office space in Bucharest has created a situation in which over 80 percent of realty transactions in Bucharest are pre-rental contracts, for a price per square meter of 16-17 euros.

Currently the class A office space stock is around 210,000 square meters, well below the level recorded in most European capitals, while class B space amounts to approximately 300,000 square meters.

On the residential market, Dorin Cojocaru of the Retail Credits for Individuals Department of the Romanian Commercial Bank (BCR), stated that the real estate market will continue to develop, supported by the growing income of the population, infrastructure development and lower interest rates. According to Cojocaru, realty and mortgage credits rose this year by 32 percent, while consumer credits increased 70 percent. The situation is due to the higher liquidity of consumer credits and the lack of real offer on the market. “Only recently have the large developers entered the market,” said Cojocaru.

The BCR representative considers that the best option for a client at present is to acquire a residence with a credit in lei, which has interest rate of 8-10 percent per year. However, Cojocaru advised that interest rates could be modified in future, taking into consideration other economic indicators, as well the reference rate set by the central bank.

Land prices to stabilize nationwide

by Robert Comanoiu, Bucharest Daily News
OCTOBER 12, 2005


Prices of land increased in the last 18 months by 60-70% because of the big market demand but they should stabilize in the future, according to a study realized by CB Richard Ellis (CBRE). The company shows that in the coming years, land prices will increase by an average 15-20% per year. The largest part of the offers for land located inside towns is represented by the small individual properties of up to 2,000 square meters and the properties of the former industrial facilities with surfaces of 5,000 up to 20,000 square meters. The prices for this terrain category are high, fluctuating between 700 and 1,500 euros per square meter. This situation determined the residential and industrial buyers to focus on the terrains situated outside Bucharest, where acquisition prices are accessible. In such areas, the prices vary between 30 and 50 euros per square meter. The less developed areas like the East and Southeast of Bucharest are also the target of investors because of lower prices. The investors are also interested in medium size plots, of 1,500 square meters and 3,000 square meters and are situated inside the city, for projects regarding office and residential development, while some of these are looking for larger surfaces of up to 30,000-40,000 square meters, situated outside Bucharest, for investments in the industrial sector. According to CBRE, land prices differ depending on the size, location, access to utilities and other factors. In Bucharest’s central area, prices of land meant for real estate investments vary between 800 and 1,500 euros per square meters. At the city periphery, the prices depend on the plot’s final destination. For residential investments, the prices fluctuate between 40 euros per square meter in the south zone and 100 euros per square meter in the north zone.

Real estate goes back to basics
The Diplomat (Bucharest), November 2011

What is the real state of the real estate market in Romania? It seems that anyone trying to develop successful projects in the current market conditions has to reconsider the age-old lessons of business By Dana Verdes, Magda Purice and Roxana Cristea

In order to shine a light on the worst hit economic sector in Romania and worldwide, The Diplomat – Bucharest’s fifth annual real estate conference brought to the same table experts from across the property industry, to share key insights and practical know-how on the latest developments affecting the market today.

Changes made in response to the new realities of the current real estate market should all lead towards a balanced ratio between the costs of developing a project and the sale price dictated by the market itself.

In this equation, the price of land, which market players still complain is too high, is provoking debate among developers and buyers.

While the lack of financing has been cited as the primary cause for the absence of residential projects in the local market, now excessive land prices represent a major impediment to further projects, according to experts from across the real estate industry who came together at the fifth annual real estate conference “The real state of the real estate market” event organized by The Diplomat – Bucharest and Noerr, under the auspices of Ministry of Regional Development and Tourism. The event partners wer Erste Group Immorent Romania IFN, H&J Martin, HomeLife, New Kopel Group.

Real estate market readjustments

The current shape of the real estate market is a result of past strategies which, according to developers, did not correctly follow basic business principles. Maybe the market is not now facing a crisis, suggest some developers, but has just started to relearn the necessary steps in order to change a system that no longer functions.

Ingo Nissen, managing director, Developments Romania, Sonae Sierra

I don’t think we are in the middle of a crisis as much we are facing the actual changing of a system. Now we are confronted with the fall of the banks, financing has disappeared and this means the beginning of a new system and the need to adjust to the current market conditions. Compared with other countries, Romania is still on a developing trend in real estate. Locally, more equity is needed and the times of cashing in 30 percent profit for a project are now over.

The main ingredients that should define the local market are the location of a project and its surroundings.

Regarding location, developers should think twice before acquiring a promising location at a lower price, without taking into account the further development of that project and what it would offer to its tenants or buyers.

The trends in developing projects at this time and on the overall market include a focus on tailor-made projects, customized services and a balanced ratio between developing costs and the sale price of the project.

Bogdan Cernescu, Erste Group Immorent Romania IFN GM

The experience of recent years has shown us that the real estate sector is no longer the safest bet in business and that it cannot be unplugged from the real economy. Regionally, Erste Group Immorent applied a standardized strategy of operations, meaning that it assembled under the same umbrella the entire range of real estate businesses.

There are a few main issues to be outlined in the current real estate sector: the market, the sale price of residential units, the price of land and the legislation.

Within the current market context, to establish the sale price based on construction costs is the wrong approach for a developer.

The price for which a housing unit can be sold is set by the market at that time, and the balance between supply and demand is the only indicator that can establish a price. Only afterwards should calculations take into account the costs of construction and the land purchase price.

Plots are still expensive, especially for large projects. Indeed the market has posted falls in the last few years but the functional level has not been touched yet. For instance, the price for a land plot on which a developer plans a residential development should not exceed EUR 100 for 1 point of land use indicator (CUT) , in order for housing developments to come at reasonable costs.

Regarding parking spaces, we are also seeing some problems. The current law forces developers to build parking spaces.

Hence, the burden is transferred to the real estate developers, especially for projects built in central areas of large cities, such as Bucharest.

This demand affects the capitalization of developers working on a real estate project. In addition, purchasing power is lower and buyers who want a home for EUR 35,000 to EUR 55,000 don’t intend to buy a parking space too.

Legal and financial issues need adjustment

With 30 new clauses impacting different sectors of the local economy, some new elements and clarifications brought with the new version of Civil Code particularly address real estate transactions, such as lease contracts and the status of mortgages, and establish the institution of lesion. These changes and clarifications affect the financial system with a direct impact for developers and the future business plans of real estate projects.

Corneliu Popa, attorney at law, Noerr

The new Civil Code, which entered into force on October 1, is a refinement of the old code and most of the new adjustments come from the French-Canadian code (Quebec code) and include elements which can be found in the Swiss code. The new code brings several interesting changes.

For example, a lease is limited to 30 years and mortgages are not so effective (mortgaged property cannot be undetectable and inalienable), which mainly affects the banking system.

Some of the main changes of the new Civil Code comprise adjustments to the rental contracts for a consecutive property or the institution of lesion applying more widely.

Bogdan Cernescu, Erste Group Immorent Romania IFN GM

In view of the financing trend in this sector, we have found that banks are currently asking for 30-50 percent capital from the developer in order to finance a project and the developer’s participation could reach up to 70 percent in some cases. On the medium and long term, we will witness the specialization of financial players, a smaller appetite for both investment and financing and fewer investors on the local market.

Ana Dumitrache, head of the real estate financing department, Erste Bank-BCR

Even in the last difficult economic period, we have been present on the market with financing and our strategy will continue on the same lines. Currently, our focus is on income-producing real estate properties that have a market risk near to zero. Next year, we will focus on office, industrial, logistics, retail and only occasionally on tourism and residential. Regarding our investments in real estate projects, we attained a similar level compared with 2010. It is true that we didn’t post fabulous investment volumes this year but the volume of projects was also not at that level. Now, the number of financeable projects is similar to the previous year.

Andrew Prelea, CEO Ozone Homes

I have witnessed three recessions so far in global and local economies. Before 2007 and 2008, I saw 100 percent growth in capital in the case of some companies, for instance, but now we have to face the current market reality which takes into account affordability.

For every burden there is a bust – the lesson of every crisis. Besides, we should listen to the fourth rule in real estate – never believe your own valuation. Now, we should return to reality.

Take the green path

The focus on green within the overall real estate scheme of developing projects is evident, but developers underline that the way to hell is paved with good intentions. The truth is that the higher costs of a green project impact not only the buyers, who prefer cheaper conventional projects over green ones, but also access to financing, which becomes tougher.

Eugen Curteanu, state secretary, Ministry of Regional Development and Tourism

Our focus is to find an alternative to energy performance projects and as such we are in advanced discussions with the EU in order to attract the 4 percent of EU funds, representing EUR 800 million, for the development of energy-wise buildings. At this moment, our proposal is on the EU’s table and we are waiting for an answer.

In relation to the green-approach of our strategy, in April this year the ministry published a list of the projects submitted for public-private partnerships (PPP), which include infrastructure projects and also the first eco-district in Romania, the aim of which is to be a pilot project for the implementation of a new model of integrated urban development in Romania.

The project will be developed by the ANL in Ghencea, western Bucharest, and we estimate that the feasibility studies for the project will be completed in the spring of 2012. After this, we will begin organizing public auctions in order to select the private partners for this project.

Because of the size of the project, comprising 10,000 homes built on a 101.5-hectare land plot, I think we must consider several private partners to develop this project in several stages.

A major reference in establishing the energy performance strategy for buildings is Directive 2010/31/EU and our proposal to introduce mandatory energy performance certificates in any transaction. Therefore, based on our legal proposal, any transaction, whether it is lending, selling or buying, becomes largely null if the legal papers don’t include the energy performance certificate too.

Andrew Prelea, CEO Ozone Homes

The government First House program is not really a vector for the real estate industry. Some of the largest problems facing the economy today include the taxation system, which exacerbates the current salary policies. That is why the sale price should take into account what buyers in Romania can afford. There is still a market here, but the demand is for EUR 35-55,000 homes.

With the growth of utilities, people need to build green. We have seen it in commercial, industry but not yet in residential.

The main driver to get out of the recession should be the real estate sector. The 24 percent VAT is the first thing that should be eliminated and lending policies should be relaxed.

Stefan Dumitrascu, chief architect, District 3 City Hall

The current realities in Romania show that we are heading towards a population density of over 1,600 inhabitants for 10,000 sqm, which is, in sociology, the limit where the breach begins. For instance, Bucharest has, in some neighborhoods, as many as 3,600 inhabitants per 10,000 sqm. The territorial shrinkage and the increasing population density are factors that will shape future dwellings, especially in urban areas. We have to redefine the concept of urban development for the next 20 years.

The impossible dream of 30 percent profit

The parking and administrative costs transferred to developers for some projects have concerned some real estate players. However, the large available industrial platforms in Bucharest don’t explain the still excessive prices of land. Developers say profit per project could reach 10-20 percent at most. The previous profit of 30 percent is an impossible dream now.

Antoniu Panait, managing director Interprime Properties

We are witnessing the maturing of the real estate segment. The focus is on the quality of the project and the services offered to customers. But a project should end with an analysis of the generated revenues and potential sale price. Today, we are seeing high sale prices. We acquired the Timpuri Noi Platform last year (e.n: a transaction worth EUR 34. 6 million involving 51,000 sqm) and this is valid proof that we are confident in the Romanian market.

However, at the same time, we have to be aware of the international and local economic climate. Of course it hurts to see a significant cut in property prices but we have to take into account the market level when selling a project at this time. Before 2008, Romania had a completely immature market. In my opinion, Romania cannot be in the same price range as Western countries. Even now, the local market is overpriced. EUR 200 per sqm outside Bucharest is not a realistic level.

Daniel Fuchs, general manager Spiegelfeld

Residential prices in Romania are inexplicably high, mainly due to land costs. The land is the only variable that can bring down prices on the residential market. A profit of 30 percent for a residential project is exaggerated and impossible to attain at the moment, though this was a reasonable margin from 2004-2007. In our opinion, profit can reach 10-15 percent in the current market expectations; 20 percent is a peak.

Ionut Bordei, CEO Cordia Futureal

For us, the Romanian market still delivers good business opportunities. In our opinion, there are two categories of businesspeople present on the market: those who are really developing business projects and others just trying to recover the losses they registered in the last few years, who took out big loans.

The first thing to take into account on the Romanian market at this time is the demand for housing projects. We still have a lot of land which formerly belonged to different industrial facilities in Bucharest and even if developers built 20 projects per year each, we would not use up the entire land stock for more than 50 years. But at this time, land prices for those platforms are inexplicably high.

In project development, there are many costs which affect the final selling price. Also, there are other costs which seem to be forgotten sometimes. Within a project, until the residents’ association is formed, the costs of all the utilities of the housing complex are billed to the developer. These are also financing costs which should be on the agenda of a developer and financing institution.

As EU date nears, Bucharest shakes off a drab image
By Roxana Popescu, International Herald Tribune
May 6, 2005


BUCHAREST Cristina Tutan sighed as she drove up to the Stirbei Palace, a villa in the city center that had been on the market for more than a year.

 

“It’s falling to pieces,” Tutan said as she stepped into the foyer. That was putting it gently. The neo-Classical mansion, built in 1835 and seized by the Communist government in 1940, had been neglected for decades. What remained was a carcass: smashed floor mosaics, rotting wood and layers of dust.

 

Yet Tutan, a real estate agent who specializes in luxury properties, recently sold the property for €3.5 million, or $4.5 million, to a Romanian. (Real estate transactions in Bucharest are expressed in euros, rather than Romanian leus.) She had banked on the allure of the villa’s history and Bucharest’s potential as an “it” city – and her gamble paid off.

 

Long considered a step behind its Western neighbors, this capital of two million people has struggled to shake off its reputation as a gritty den of corruption. Its success may have been gradual until recently but, as the large digital clock in Piata Universitatii, the university square, counts down to Jan. 1, 2007, the country’s target date for entering the European Union, the change is accelerating by the day.

 

Cafés and restaurants with global flavors have been opening in every neighborhood, glamorous new hotels have appeared with galleries of boutiques, and plans are under way to revitalize Lipscani, a drab but bustling neighborhood with cobblestone streets and antique shops that eventually could anchor the city’s historic district.

 

“Bucharest will be, whether you like it or not, a grand city,” declared Artur Silvestri, a real estate agent and the editor of Casa Lux magazine. “Whoever is smart puts money into this country before integration. A foreigner at the present moment should hurry. If he didn’t come until now, that was a mistake, but there’s still time.”

 

(Anyone is allowed to buy buildings in Romania, although only citizens or legal entities like corporations can buy undeveloped land.)

 

In 2004, prices rose 65 percent for land and 40 percent for residential properties, primarily because of growing demand from both Romanians and foreigners, Tutan said. Another factor was an increase in bank financing, which made it easier for Romanians of all income levels to buy homes, according to a yearly market overview by Eurisko Consulting, a real estate company.

 

While the city’s suburbs are acquiring slick new apartments and American-style developments with names like Washington Residence, a few Romanians and many more foreigners are eyeing the city’s old housing stock.

 

These villas, concentrated in the city center and in the exclusive northern district, date from the mid-19th and early 20th centuries, a time when the city was known as Little Paris. Many emulate French fin-de-siècle architecture, but the more distinctive ones feature the carved stone garlands and arched loggias of the local neo-Romanian style.

 

Villas start at about 1,000 square meters, or 10,800 square feet, with a basement, an attic and two or three floors of living space. They typically have living and dining rooms, a kitchen, four or five bedrooms, two bathrooms on each floor and often a music room or morning sitting room.

 

This is a city of startling, and sometimes poignant, contrasts – where small churches are flanked by massive Communist-era buildings and the traffic stops for nothing but the increasingly rare horse-drawn cart. The treatment of these properties has been no exception.

 

Along Calea Victoriei, a thoroughfare lined with villas, including the Stirbei Palace, it seems as if the restoration fairy has waved her wand most haphazardly. Some buildings are sparkling clean, a few are covered in scaffolding and many are still in shambles. The disparate conditions are the result of the former government’s reluctance to return properties confiscated during the Communist era, leading to a backlog of thousands of requests.

 

The new government, led by President Traian Basescu, has promised to process the unresolved cases and to clean up the judicial system, so some villas eventually may go on the market. But for now, the supply is limited, agents said.

 

Still, the real value is in the dilapidated properties because, in Romania, repairs are rarely guaranteed, so buying a renovated villa can be risky. Making sure a building is earthquake-safe is a priority.

 

“I have always been of the principle that when you’re buying an old house, a house with a biography, you have to buy it unrenovated,” Silvestri said. “Then, it is sincere. It talks to you, it tells you everything you need to hear.” He sees a gaping difference between these historic homes and the city’s new suburbs.

 

“We may call them luxury neighborhoods, but that’s no luxury,” Silvestri said. “They’re uncomfortable, new, shiny. But not luxury. Then, there’s an authentic luxury market, and these are the old buildings.”

 

But authentic luxury does not come cheap. Rents for renovated villas are €4,000 to €15,000 per month along the ultra-exclusive Soseaua Kiseleff, a broad, tree-lined avenue.

 

Homes for sale in the same area range from €1,200 to €2,000 per square meter, according to Eurisko. Prices, which are considerably lower in other areas, vary with a building’s dimensions, age, neighborhood, condition and lot size.

 

“Costs are high for Romania, but they aren’t so high for Europe,” said Tutan, who charges 1.5 percent commission on residential transactions.

 

Adela Stan, a Romanian who bought a 1,400-square-meter unrenovated villa for €1.5 million in December, said she sensed it was the right time to act. “I saw how prices were skyrocketing,” she said. “Our money was sitting in the bank, and everyone around us was buying.” A week after closing the deal on the 1921 structure, another interested buyer called with an offer.

 

While most foreigners in Bucharest work for embassies or multinational corporations, some second-home buyers have started trickling in.

 

“Those personally invested in business here come for work,” “Few people come to just live in Bucharest,” said Despina Ponomarenco of Eurisko. “But it’s a category that’s developing. It’s cheap, safe and it’s interesting. Charming.”

 

 

BUCHAREST Cristina Tutan sighed as she drove up to the Stirbei Palace, a villa in the city center that had been on the market for more than a year.

 

“It’s falling to pieces,” Tutan said as she stepped into the foyer. That was putting it gently. The neo-Classical mansion, built in 1835 and seized by the Communist government in 1940, had been neglected for decades. What remained was a carcass: smashed floor mosaics, rotting wood and layers of dust.

 

Yet Tutan, a real estate agent who specializes in luxury properties, recently sold the property for €3.5 million, or $4.5 million, to a Romanian. (Real estate transactions in Bucharest are expressed in euros, rather than Romanian leus.) She had banked on the allure of the villa’s history and Bucharest’s potential as an “it” city – and her gamble paid off.

 

Long considered a step behind its Western neighbors, this capital of two million people has struggled to shake off its reputation as a gritty den of corruption. Its success may have been gradual until recently but, as the large digital clock in Piata Universitatii, the university square, counts down to Jan. 1, 2007, the country’s target date for entering the European Union, the change is accelerating by the day.

 

Cafés and restaurants with global flavors have been opening in every neighborhood, glamorous new hotels have appeared with galleries of boutiques, and plans are under way to revitalize Lipscani, a drab but bustling neighborhood with cobblestone streets and antique shops that eventually could anchor the city’s historic district.

 

“Bucharest will be, whether you like it or not, a grand city,” declared Artur Silvestri, a real estate agent and the editor of Casa Lux magazine. “Whoever is smart puts money into this country before integration. A foreigner at the present moment should hurry. If he didn’t come until now, that was a mistake, but there’s still time.”

 

(Anyone is allowed to buy buildings in Romania, although only citizens or legal entities like corporations can buy undeveloped land.)

 

In 2004, prices rose 65 percent for land and 40 percent for residential properties, primarily because of growing demand from both Romanians and foreigners, Tutan said. Another factor was an increase in bank financing, which made it easier for Romanians of all income levels to buy homes, according to a yearly market overview by Eurisko Consulting, a real estate company.

 

While the city’s suburbs are acquiring slick new apartments and American-style developments with names like Washington Residence, a few Romanians and many more foreigners are eyeing the city’s old housing stock.

 

These villas, concentrated in the city center and in the exclusive northern district, date from the mid-19th and early 20th centuries, a time when the city was known as Little Paris. Many emulate French fin-de-siècle architecture, but the more distinctive ones feature the carved stone garlands and arched loggias of the local neo-Romanian style.

 

Villas start at about 1,000 square meters, or 10,800 square feet, with a basement, an attic and two or three floors of living space. They typically have living and dining rooms, a kitchen, four or five bedrooms, two bathrooms on each floor and often a music room or morning sitting room.

 

This is a city of startling, and sometimes poignant, contrasts – where small churches are flanked by massive Communist-era buildings and the traffic stops for nothing but the increasingly rare horse-drawn cart. The treatment of these properties has been no exception.

 

Along Calea Victoriei, a thoroughfare lined with villas, including the Stirbei Palace, it seems as if the restoration fairy has waved her wand most haphazardly. Some buildings are sparkling clean, a few are covered in scaffolding and many are still in shambles. The disparate conditions are the result of the former government’s reluctance to return properties confiscated during the Communist era, leading to a backlog of thousands of requests.

 

The new government, led by President Traian Basescu, has promised to process the unresolved cases and to clean up the judicial system, so some villas eventually may go on the market. But for now, the supply is limited, agents said.

 

Still, the real value is in the dilapidated properties because, in Romania, repairs are rarely guaranteed, so buying a renovated villa can be risky. Making sure a building is earthquake-safe is a priority.

 

“I have always been of the principle that when you’re buying an old house, a house with a biography, you have to buy it unrenovated,” Silvestri said. “Then, it is sincere. It talks to you, it tells you everything you need to hear.” He sees a gaping difference between these historic homes and the city’s new suburbs.

 

“We may call them luxury neighborhoods, but that’s no luxury,” Silvestri said. “They’re uncomfortable, new, shiny. But not luxury. Then, there’s an authentic luxury market, and these are the old buildings.”

 

But authentic luxury does not come cheap. Rents for renovated villas are €4,000 to €15,000 per month along the ultra-exclusive Soseaua Kiseleff, a broad, tree-lined avenue.

 

Homes for sale in the same area range from €1,200 to €2,000 per square meter, according to Eurisko. Prices, which are considerably lower in other areas, vary with a building’s dimensions, age, neighborhood, condition and lot size.

 

“Costs are high for Romania, but they aren’t so high for Europe,” said Tutan, who charges 1.5 percent commission on residential transactions.

 

Adela Stan, a Romanian who bought a 1,400-square-meter unrenovated villa for €1.5 million in December, said she sensed it was the right time to act. “I saw how prices were skyrocketing,” she said. “Our money was sitting in the bank, and everyone around us was buying.” A week after closing the deal on the 1921 structure, another interested buyer called with an offer.

 

While most foreigners in Bucharest work for embassies or multinational corporations, some second-home buyers have started trickling in.

 

“Those personally invested in business here come for work,” “Few people come to just live in Bucharest,” said Despina Ponomarenco of Eurisko. “But it’s a category that’s developing. It’s cheap, safe and it’s interesting. Charming.”

 

 

BUCHAREST Cristina Tutan sighed as she drove up to the Stirbei Palace, a villa in the city center that had been on the market for more than a year.

 

“It’s falling to pieces,” Tutan said as she stepped into the foyer. That was putting it gently. The neo-Classical mansion, built in 1835 and seized by the Communist government in 1940, had been neglected for decades. What remained was a carcass: smashed floor mosaics, rotting wood and layers of dust.

 

Yet Tutan, a real estate agent who specializes in luxury properties, recently sold the property for €3.5 million, or $4.5 million, to a Romanian. (Real estate transactions in Bucharest are expressed in euros, rather than Romanian leus.) She had banked on the allure of the villa’s history and Bucharest’s potential as an “it” city – and her gamble paid off.

 

Long considered a step behind its Western neighbors, this capital of two million people has struggled to shake off its reputation as a gritty den of corruption. Its success may have been gradual until recently but, as the large digital clock in Piata Universitatii, the university square, counts down to Jan. 1, 2007, the country’s target date for entering the European Union, the change is accelerating by the day.

 

Cafés and restaurants with global flavors have been opening in every neighborhood, glamorous new hotels have appeared with galleries of boutiques, and plans are under way to revitalize Lipscani, a drab but bustling neighborhood with cobblestone streets and antique shops that eventually could anchor the city’s historic district.

 

“Bucharest will be, whether you like it or not, a grand city,” declared Artur Silvestri, a real estate agent and the editor of Casa Lux magazine. “Whoever is smart puts money into this country before integration. A foreigner at the present moment should hurry. If he didn’t come until now, that was a mistake, but there’s still time.”

 

(Anyone is allowed to buy buildings in Romania, although only citizens or legal entities like corporations can buy undeveloped land.)

 

In 2004, prices rose 65 percent for land and 40 percent for residential properties, primarily because of growing demand from both Romanians and foreigners, Tutan said. Another factor was an increase in bank financing, which made it easier for Romanians of all income levels to buy homes, according to a yearly market overview by Eurisko Consulting, a real estate company.

 

While the city’s suburbs are acquiring slick new apartments and American-style developments with names like Washington Residence, a few Romanians and many more foreigners are eyeing the city’s old housing stock.

 

These villas, concentrated in the city center and in the exclusive northern district, date from the mid-19th and early 20th centuries, a time when the city was known as Little Paris. Many emulate French fin-de-siècle architecture, but the more distinctive ones feature the carved stone garlands and arched loggias of the local neo-Romanian style.

 

Villas start at about 1,000 square meters, or 10,800 square feet, with a basement, an attic and two or three floors of living space. They typically have living and dining rooms, a kitchen, four or five bedrooms, two bathrooms on each floor and often a music room or morning sitting room.

 

This is a city of startling, and sometimes poignant, contrasts – where small churches are flanked by massive Communist-era buildings and the traffic stops for nothing but the increasingly rare horse-drawn cart. The treatment of these properties has been no exception.

 

Along Calea Victoriei, a thoroughfare lined with villas, including the Stirbei Palace, it seems as if the restoration fairy has waved her wand most haphazardly. Some buildings are sparkling clean, a few are covered in scaffolding and many are still in shambles. The disparate conditions are the result of the former government’s reluctance to return properties confiscated during the Communist era, leading to a backlog of thousands of requests.

 

The new government, led by President Traian Basescu, has promised to process the unresolved cases and to clean up the judicial system, so some villas eventually may go on the market. But for now, the supply is limited, agents said.

 

Still, the real value is in the dilapidated properties because, in Romania, repairs are rarely guaranteed, so buying a renovated villa can be risky. Making sure a building is earthquake-safe is a priority.

 

“I have always been of the principle that when you’re buying an old house, a house with a biography, you have to buy it unrenovated,” Silvestri said. “Then, it is sincere. It talks to you, it tells you everything you need to hear.” He sees a gaping difference between these historic homes and the city’s new suburbs.

 

“We may call them luxury neighborhoods, but that’s no luxury,” Silvestri said. “They’re uncomfortable, new, shiny. But not luxury. Then, there’s an authentic luxury market, and these are the old buildings.”

 

But authentic luxury does not come cheap. Rents for renovated villas are €4,000 to €15,000 per month along the ultra-exclusive Soseaua Kiseleff, a broad, tree-lined avenue.

 

Homes for sale in the same area range from €1,200 to €2,000 per square meter, according to Eurisko. Prices, which are considerably lower in other areas, vary with a building’s dimensions, age, neighborhood, condition and lot size.

 

“Costs are high for Romania, but they aren’t so high for Europe,” said Tutan, who charges 1.5 percent commission on residential transactions.

 

Adela Stan, a Romanian who bought a 1,400-square-meter unrenovated villa for €1.5 million in December, said she sensed it was the right time to act. “I saw how prices were skyrocketing,” she said. “Our money was sitting in the bank, and everyone around us was buying.” A week after closing the deal on the 1921 structure, another interested buyer called with an offer.

 

While most foreigners in Bucharest work for embassies or multinational corporations, some second-home buyers have started trickling in.

 

“Those personally invested in business here come for work,” “Few people come to just live in Bucharest,” said Despina Ponomarenco of Eurisko. “But it’s a category that’s developing. It’s cheap, safe and it’s interesting. Charming.”

 

 

BUCHAREST Cristina Tutan sighed as she drove up to the Stirbei Palace, a villa in the city center that had been on the market for more than a year.

 

“It’s falling to pieces,” Tutan said as she stepped into the foyer. That was putting it gently. The neo-Classical mansion, built in 1835 and seized by the Communist government in 1940, had been neglected for decades. What remained was a carcass: smashed floor mosaics, rotting wood and layers of dust.

 

Yet Tutan, a real estate agent who specializes in luxury properties, recently sold the property for €3.5 million, or $4.5 million, to a Romanian. (Real estate transactions in Bucharest are expressed in euros, rather than Romanian leus.) She had banked on the allure of the villa’s history and Bucharest’s potential as an “it” city – and her gamble paid off.

 

Long considered a step behind its Western neighbors, this capital of two million people has struggled to shake off its reputation as a gritty den of corruption. Its success may have been gradual until recently but, as the large digital clock in Piata Universitatii, the university square, counts down to Jan. 1, 2007, the country’s target date for entering the European Union, the change is accelerating by the day.

 

Cafés and restaurants with global flavors have been opening in every neighborhood, glamorous new hotels have appeared with galleries of boutiques, and plans are under way to revitalize Lipscani, a drab but bustling neighborhood with cobblestone streets and antique shops that eventually could anchor the city’s historic district.

 

“Bucharest will be, whether you like it or not, a grand city,” declared Artur Silvestri, a real estate agent and the editor of Casa Lux magazine. “Whoever is smart puts money into this country before integration. A foreigner at the present moment should hurry. If he didn’t come until now, that was a mistake, but there’s still time.”

 

(Anyone is allowed to buy buildings in Romania, although only citizens or legal entities like corporations can buy undeveloped land.)

 

In 2004, prices rose 65 percent for land and 40 percent for residential properties, primarily because of growing demand from both Romanians and foreigners, Tutan said. Another factor was an increase in bank financing, which made it easier for Romanians of all income levels to buy homes, according to a yearly market overview by Eurisko Consulting, a real estate company.

 

While the city’s suburbs are acquiring slick new apartments and American-style developments with names like Washington Residence, a few Romanians and many more foreigners are eyeing the city’s old housing stock.

 

These villas, concentrated in the city center and in the exclusive northern district, date from the mid-19th and early 20th centuries, a time when the city was known as Little Paris. Many emulate French fin-de-siècle architecture, but the more distinctive ones feature the carved stone garlands and arched loggias of the local neo-Romanian style.

 

Villas start at about 1,000 square meters, or 10,800 square feet, with a basement, an attic and two or three floors of living space. They typically have living and dining rooms, a kitchen, four or five bedrooms, two bathrooms on each floor and often a music room or morning sitting room.

 

This is a city of startling, and sometimes poignant, contrasts – where small churches are flanked by massive Communist-era buildings and the traffic stops for nothing but the increasingly rare horse-drawn cart. The treatment of these properties has been no exception.

 

Along Calea Victoriei, a thoroughfare lined with villas, including the Stirbei Palace, it seems as if the restoration fairy has waved her wand most haphazardly. Some buildings are sparkling clean, a few are covered in scaffolding and many are still in shambles. The disparate conditions are the result of the former government’s reluctance to return properties confiscated during the Communist era, leading to a backlog of thousands of requests.

 

The new government, led by President Traian Basescu, has promised to process the unresolved cases and to clean up the judicial system, so some villas eventually may go on the market. But for now, the supply is limited, agents said.

 

Still, the real value is in the dilapidated properties because, in Romania, repairs are rarely guaranteed, so buying a renovated villa can be risky. Making sure a building is earthquake-safe is a priority.

 

“I have always been of the principle that when you’re buying an old house, a house with a biography, you have to buy it unrenovated,” Silvestri said. “Then, it is sincere. It talks to you, it tells you everything you need to hear.” He sees a gaping difference between these historic homes and the city’s new suburbs.

 

“We may call them luxury neighborhoods, but that’s no luxury,” Silvestri said. “They’re uncomfortable, new, shiny. But not luxury. Then, there’s an authentic luxury market, and these are the old buildings.”

 

But authentic luxury does not come cheap. Rents for renovated villas are €4,000 to €15,000 per month along the ultra-exclusive Soseaua Kiseleff, a broad, tree-lined avenue.

 

Homes for sale in the same area range from €1,200 to €2,000 per square meter, according to Eurisko. Prices, which are considerably lower in other areas, vary with a building’s dimensions, age, neighborhood, condition and lot size.

 

“Costs are high for Romania, but they aren’t so high for Europe,” said Tutan, who charges 1.5 percent commission on residential transactions.

 

Adela Stan, a Romanian who bought a 1,400-square-meter unrenovated villa for €1.5 million in December, said she sensed it was the right time to act. “I saw how prices were skyrocketing,” she said. “Our money was sitting in the bank, and everyone around us was buying.” A week after closing the deal on the 1921 structure, another interested buyer called with an offer.

 

While most foreigners in Bucharest work for embassies or multinational corporations, some second-home buyers have started trickling in.

 

“Those personally invested in business here come for work,” “Few people come to just live in Bucharest,” said Despina Ponomarenco of Eurisko. “But it’s a category that’s developing. It’s cheap, safe and it’s interesting. Charming.”