|Return||Real Estate Slowdown, bounceback expected in 2009
Business Review – November 10, 2008
With German property funds having recently frozen shareholder redemption, it seems like it could be a while before property markets bounce back. Romania is not protected against these market movements, despite the existing demand and still strong fundamentals, pundits say. Yield decompression is one of the main problems, but specialists expect real estate trading to pick up in the first half of 2009. Meanwhile, property owners are holding their breath for news from their banks.
German funds freeze shareholder redemption
Romania, not far from the madding crowd
For some, it may seem like Romania is far from the noise. But it is not and the noise is getting louder, as many of these investors own Romanian properties. Take DEGI, which has made two investments in Romania, in an office building portfolio and in Iris shopping center, the latter bought earlier this year, and was also looking to buy more. DEGI has suspended the redemption of shares for DEGI Europa and Degi International Funds, both investors on the Romanian market. “In order to ensure the necessary liquidity for maintaining an uninterrupted business operation in the best interest of its investors, the fund has to suspend the redemption of shares,” said DEGI. The redemption was limited to a three-month period, and payments into the fund, through saving schemes and in the form of one-time deposits, continue to be possible. The fund stated its business continued to be sound, with high letting percentages, and with one-year performance amounting to some 4.4 percent for DEGI Europa fund and to 4.8 percent for DEGI International, as of October 30 this year.
Yield decompression, particularly problematic in Romania
Banks, not expected to declare defaults on property owners
The upside of the downturn
By Corina Saceanu.