Building suburbs from zero
As he gambles on constructing a town on the outskirts of Bucharest, Ahmet Buyukhanli of Opus Land Development talks to Corina Ilie
Specialists in developing luxury residences in Turkey, the Buyukhanli Group took a chance on a new concept for the firm’s first international venture: building a new town on fields outside northeast Bucharest.
Through its development subsidiary, Opus Land Development, the company is pouring around 700 million Euro in a residential project including 4,600 apartments and houses. The entire ‘Cosmopolis’ project is due to be ready by 2014.
Last year the company stated this was the largest development in the country and the project is not without ambition. It stretches over a 1.08 million sqm land plot in Stefanestii de Jos, at the junction of Strada Tunari and the Bucharest ring–road, and will include commercial and office buildings, as well as a health club.
Ahmet Buyukhanli, chairman of Opus, says all 565 apartments in the Cosmopolis’s first phase, to be delivered this year, have been sold on promotional prices. So far, he says, half of the apartments included in the second phase have also been sold. The prices are an option for a middle class family looking to move out of the city, who will have to pay 85,000 Euro for a two-room apartment. With a five per cent advance and a 20-year bank loan, buyers will end up needing around 500 Euro per month.
“This is quite affordable for a couple both working who can get a 20 year bank loan,” argues Buyukhanli.
But this will only be attractive for people willing to live in the suburbs of Bucharest. However Buyukhanli sees an appetite for the new towns. “Owners of big companies and some other quite wealthy people prefer to live in residential complexes, not in single apartments, because these concepts include all the facilities they look for,” he adds. “This is where they can have swimming pools, tennis courts and large green areas. A residential complex provides much more than just housing.”
Stefanestii de Jos is witnessing a building boom as developers start creating a new suburban vision on the site of a village and farms, hoping it will become the choicest location for householders looking for a modern garden city.
However, while Spanish competitor Martinsa Fadesa has announced the construction of a 7,600 apartments project in the same village, the company is now undergoing a liquidity crisis which could affect the delivery of the project by 2015 as planned.
A minor village, Stefanestii de Jos also has some infrastructure shortcomings, which Opus Land Development says it has “partially” solved. “We can provide the electricity and the gas, but we cannot build the road infrastructure,” says Buyukhanli. “I am confident that in time the roads will be built because I have seen some progress over the past year. Works on the enlargement of the ring road have already started. We can only improve our complex and the community near us, but if we are talking about the motorway or other roads, these are governmental issues.”
During the week it takes at least one hour to get from Stefanestii de Jos to Bucharest by car. The bus is the only other transportation means in the area, because the overland train is underdeveloped and there is no metro or tram.
This lack of a strong public network to ensure the people in the suburbs can access the city at a high speed has not stopped developers creating new projects outside the ring-road.
Many other developers are constructing communities in Ilfov county, but on a smaller scale. UK-based Helios Development will deliver in February 2009 the English Village residential project, including 710 units, shopping and sports facilities in Clinceni. American developer European Future Group is also working on a 700-unit complex in Buftea, called Buftea village, to be completed in seven phases by 2013.
Critical real estate analysts think that some of these large scale projects will not be successful because certain developers use lower quality construction materials and the living units are small. This justifies the low prices per unit, but does not satisfy the consumer. Others argue that because these complexes are delivered in several phases over a long period, this allows the developers time to sell all the apartments without having to compromise the size and quality of the units.
Ahmet Buyukhanli sees development potential for all the areas in Ilfov county. “All the lands between the Vodafone building in Voluntari and Stefanestii de Jos will be developed in the next ten years,” he argues.
Since Opus Land Development bought the 1.08 million sqm land plot in 2005, the Turkish businessman says prices have increased dramatically. “I do not expect any important drop in the future,” he adds. “If land owners are more willing to negotiate, it’s because the Romanian market has been affected by the credit crunch. There is always a market and we cannot talk about one seller and one buyer only. If the prices keep increasing then there will not be any transactions for a while.”
Opus: not ruling out
Opus Land Development will keep developing projects in northern Bucharest due to the potential of the area and the proximity of the two international airports, but does not rule out the possibility of acquiring lands in Bucharest city centre. Buyukhanli Group was set up in Turkey in 1953 as a constructor of luxury residential projects and hotels in Istanbul and in Antalya. The group decided to enter Romania last year due to the low land prices and the high demand for living units. Romania is the first foreign country where the Buyukhanli Group has decided to invest. The company is also targeting Ukraine and the Republic of Moldova.