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 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

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.

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.

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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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.

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.

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.

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.

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.”