New flat craze remains in capital
Residential developments in Romania have been hit by the credit crunch, but the pace of development for apartments in Bucharest is still at the highest level since the 1980s, writes Corina Ilie
All central and eastern European countries have witnessed a drop in property investments in the first half of 2008 compared to the same period last year, according to real estate agency Jones Lang La Salle.
Top of the list after Hungary is Romania, which saw a staggering 43 per cent fall in investments to 902 million Euro. Lack of credit, high land prices and dropping yields have turned many investors off Romanian real estate.
Around 100 residential projects have been announced this year, as opposed to 140 between January and October 2007. Most of these projects are developed by Romanian, Israeli and Spanish companies in Bucharest. Cluj-Napoca, Iasi, Timisoara, Brasov and Constanta are the next locations preferred by real estate investors. A large number of Israeli investors, such as Bas Development in Ploiesti, Barak International on Buftea Lake and Caterata Ltd in Bucharest’s Blvd Ionescu Sisesti, have started construction this year. Developer Intercolony has also announced a project in Afumati, Ilfov county for delivery in 2009.
Fewer Spanish developers have been willing to enter Romania this year. Exceptions include CP Grupo with the Lakeland Residence complex near Plumbuita Lake and Spadevel with an eight million Euro residential building in Bucharest city centre.
“Many Spanish investors still call us to ask about the market,” says Ionut Dogaru, general manager of Spanish developers Grupo Lar. “There are not as many as before, but the interest for Romania still exists.”
Some developers saw the number of sold dwellings drop in spring. Grupo Lar’s sales on Serena and Natura Residence projects have dropped since last March. Others say that the market is going through a healthy slowdown. “When we entered Romania, we knew that the market will not have a 40 per cent rate growth forever and this is a healthy correction,” says Alejandro Solano, general manager of Hercesa. “We have not noticed any change in the sales.”
More property buyers in Romania are buying new dwellings in buildings in advanced development stages or at delivery time, according to real estate agency Re/Max Imobiliare. Between 2005 and 2007 around 95 per cent of residential complexes were sold off-plan. This has fallen to 70 per cent in 2008 so far.
“Sales of new dwellings went down this year even by 30 per cent compared to the same period last year,” says Andrei Marinescu, broker and owner of Re/Max Magnum. “Developers of large projects still wish to sell units at the design stage, but this is difficult.”
North stays top
Around 5,000 apartments are due for delivery this year in Bucharest, according to Mihaela Pana, head of the residential department of real estate agency DTZ Echinox.
But Bucharest will not see any major housing developments. From The Diplomat’s research, the only houses under construction are being made, almost without exception, by private individuals. Land prices are too costly for developers to build houses anywhere in the city.
Most new residential projects are in north Bucharest. This is due to their proximity to two international airports, access to the newest shopping mall in Bucharest, Baneasa Shopping City, and green areas Herastrau Park and Baneasa Forest. Many companies have relocated to Baneasa, which means residents do not have to, theoretically, travel far to work. Between this area and the Piata Unirii is considered the top location in the city – for the moment. “The best land plots in north Bucharest are those around Casa Presei Libere, Blvd Ion Mihalache, Calea Grivitei, Baneasa and Barbu Vacarescu, due to the balance between infrastructure, development potential and the green spaces,” argues Aurelia Luca, commercial manager of developers Global Finance.
In the north by the end of this year, Polish developer Globe Trade Center (GTC) will deliver the Rose Garden residential project including 908 apartments on Soseaua Colentina. In Baneasa GTC has started to develop the 1,200 apartments Felicity complex and 4,000 apartments in the Garden of Eden project.
Meanwhile Israeli developer EuroHabitat was expected to deliver last summer the Planorama complex with 1,000 apartments on Strada Doamna Ghica. But the works have been delayed because the Turkish general contractor Yapitek has gone bankrupt. Meanwhile on Strada Jandarmeriei in Baneasa, ex-tennis player and business guru Ion Tiriac’s Tiriac Imobiliare is building 535 apartments. Austria’s Immorent Group, Kazakhstan-owned oil and gas company Rompetrol and ex-owner of Rompetrol, Dinu Patriciu and his family are constructing ‘Smart City’, which will consist of flats, shops and offices. This December 64 new apartments in 15 villas will be delivered near Baneasa forest in Solaria residence.
Lakeside utopia for sale
Although Romanians are not accustomed to living by the water, developers have been falling over themselves to buy up plots on wastelands with a view of north Bucharest’s spiralling lake network. Huge developments are taking place at the edge of the lakes Tei, Plumbuita, Grivita and Colentina in the north and near reservoir Lacul Morii in the west, in an attempt to sell consumers the fantasy of waterside views.
Spanish real estate developer CP International started construction this year on 144 apartments near Plumbuita Lake. Bosco Gutierrez, general manager of CP International says the land was more expensive than plots further from the lake, but the investment will pay off because apartments with lakeside views are ten per cent more expensive than those without.
Emerald Residence with 279 apartments, developed by Brooklyn Investments and Estia Residence with 79 apartments will be delivered this year close to Tei Lake. Spanish real estate developer Gea Prasa is also developing a 504 compound on the edge of Tei Lake, while the Neopeninsula compound of apartments, offices and shops is developed by Israeli Neocity Group next to Colentina Lake.
Centre: posh, small projects
Bucharest’s centre remains the number one target for homebuyers due to its access to transport, shops, night-life and the fact that capital city centres never go out of fashion. But only developers building for the upper-middle or luxury class can afford to build projects in these, the most expensive land plots in the city. Because the zonal urban plan allows high rise building, this could make large investments profitable. This year US developer Adama plans 79 apartments for Blvd Ferdinand in the luxury Evocasa Selecta. Smart Investment & Development will conclude this year works on the 22 living units ‘Lotus Cismigiu’ near Cismigiu Park. Close to Universitate Metro, the Lithuanian Europa Group is developing 51 apartments in Brilliant Condominium on Strada Popa Tatu. Meanwhle Israeli Ocif Group has launched the 110 apartment ‘Vivendo Unirii’ near Piata Unirii for delivery in 2009.
West and east: high-rise
West and east Bucharest are seeing a rising number of developments. In the west the high density of the population, the connection to Bucharest-Pitesti motorway and malls such as Plaza Romania have attracted residential and office development. This includes West Park Residential, with 1,500 apartments, developed by Israeli Seven Hills. In 2010, Champions Residence, Sunset Residences and Infinity Residences will be completed. Champions includes 84 apartments in the Ghencea-Drumul Taberei area. Sunset, developed by Hungarian Ablon Group is at the junction between Valea Cascadelor and Blvd Timisoara. Nearby, between Valea Cascadelor and Valea Oltului, Infinity with 2,300 apartments is under development. Spanish Herceasa and Greek investment fund Bluehouse are waiting for construction permits to start work on 3,500 flats in Ghencea on Strada Brasov. “It is a very good area with a lot of green spaces and good transport connections,” says Hercesa’s Alejandro Solano.
Around 14,000 living units are up for sale in east Bucharest, of which 1,800 in 11 residential projects will be delivered this year, according to real estate agency Media City. The average price per built sqm is around 1,400 Euro. Romanian-Irish developer Gigant Construct delivered Pallady Towers project last year and has two more projects, in the Blvd Pallady area, of which Pallady Residence is due for this year. Romanian Pro Confort Grup will also conclude this year works on the 464 units Confort Park project on Soseaua Vitan-Barzesti. The company has another ongoing project, Confort City, on Splaiul Unirii. Incity Residence, developed by the Turkish Anchor Group on Calea Dudesti, is set for delivery in 2009.
South: projects scarce
South Bucharest offers few projects at the moment. “The south area has just started to become interesting, because the land prices are reasonable and the large plots allow the development of a concept, not just a simple project,” argues Global Finance’s Aurelia Luca. In this area Marble House will deliver this year the 304 apartments in the Monaco Towers project, located in Berceni, while Romanian developer Apolodor is developing the Octopus Garden residential project, due for the forth trimester of 2009.
The south will also see a fever of shopping malls. City Mall is present in the area, while three other malls will open, including Liberty Center this autumn, Sun Plaza and Grand Arena in Berceni. A new airport has also been announced for south of the city.