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DTZ Echinox: 550 premium residential units were under construction in Bucharest at the end of 2015

In the last two years, a number of 200 apartments were completed across Bucharest premium residential locations. The highest level of supply has been delivered in Floreasca with approximately 32 per cent, followed by Herastrau area, with 25 per cent, according to latest DTZ Echinox study on premium residential market in Bucharest.

2016-03-09 15:38:07

When comparing these two areas with other premium residential locations, the average sale price per built sqm is medium. The low availability of new residential apartments (fig. 1) underlines that demand for premium residential units is strong in these particular locations. The lowest supply of new residential units is recorded in Dorobanti, area where land availability is scarce.

When analyzing the number of premium residential projects currently under construction and estimated to be completed in the next two years, the supply totals 550 apartments. Compared with 2014 – 2015, the development activity is stronger and reflects inventors' confidence in the continuing upward trend of demand for premium residential apartments.

The number of premium residential apartments delivered between 2014 – 2015 is of ~ 200 units. The current pipeline of projects that are under construction reveals that, in the next two years, approximately 550 premium apartments will be completed in the Northern part of the city. When compared with the number of units delivered in 2014 and 2015, this level is higher by 175 per cent, proving that investors have faith in the growing demand for premium residential apartments.

The most active locations in terms of construction works of premium apartments are Herastrau, followed by Aviatiei and Floreasca. This is not surprising, considering that the Northern area of Bucharest has become, in recent years, one of the most important office locations in Bucharest. At the end of Q4 2015, the estimated number of employees working in close vicinity to Herastrau, Aviatiei and Floreasca surpassed 100,000.

Low development activity is recorded in Dorobanti, Aviatorilor and Kiseleff. In these areas the land availability is quite limited and a high number of buildings are under monumental protection. Analyzing the current status of the market, the highest number of premium residential apartments available for sale are located in projects that are due to be completed in 2016 (86 per cent of the total number of apartments scheduled for completion this year are available for sale). The availabity of premium residential units scheduled for completion in 2017 is lower, with only 48 per cent being available for sale at the end of Q4 2015.

The vast majority of the projects under construction are designed to offer apartments with 2 and 3 bedrooms. When considering all the premium residential units scheduled for completion in the next two years, 60 per cent is represented by such types of units. Compared with the stock delivered between 2014 – 2015, the number of 1 bedroom apartments currently under construction is six times higher.

Demand for new apartments located in premium locations has improved compared with previous years. This trend is reflected by three main aspects: the low availability of apartments in the projects delivered between 2014 – 2015 (only 30 per cent available for sale at the end of Q4 2015); The high number of residential units that are currently under construction; The number of units sold off-plan (more than 36 per cent of the units that are currently under construction have been sold).

Since the Northern area is becoming an important office destination, the demand for premium apartments comes especially from end users with high revenues, for whom having a residence in this area of Bucharest has become a necessity. Most of the buyers are targeting apartments with 1 and 2 bedrooms, with surfaces around 100-120 sqm and prices ranging between 150,000 Euro to 300,000 Euro.

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