Thursday, November 15, 2007

Norwegians buy 800 new apartments in Bucharest

Romania Invest, a Norwegian investment fund, has acquired around 800 new apartments in five residential projects in Bucharest and around the city since the beginning of the year. The investors hope to achieve a 30-50% growth rate when the apartments are sold.

"Our plan is to sell the apartments one by one either before completion, or sell the entire portfolio to other investors. We could also let some of them, but this is not our primary strategy," Bjorn Hauge, country manager of the company told ZIARUL FINANCIAR.

The Norwegians have bought apartments in the Vitan Platinum Towers, Residenz (Chitila), Planorama (Colentina), Blue Tower (Colentina) and Ten Blocks (Militari) projects.

"We bought the first apartments at the beginning of 2007, even though we began talks at the end of 2006. We are trying to buy homes as fast as we can. Most of the time we start talks with developers before projects are even made available to the public," Hauge explains.

Hauge has been in Romania for three years, while the Norwegian fund has approximately 400 investors. The company works with Tuca Zbarcea & Asociatii law firm and with real estate consultant King Sturge on the Romanian market.

"We are in advanced talks for other projects and estimate our portfolio will reach 1,100-1,300 homes by the end of the first quarter of 2008," Hauge says.

The first homes were bought in the Vitan Platinum Towers, while the first homes to be delivered onto the market are those in the Residenz project, developed by Tiriac Imobiliare and LLW in Chitila, in early next year.

The homes were bought for around 1,100-1,200 euros per square metre. The most expensive project the Norwegians decided to put their money into was Blue

Tower, where they bought 78 of the 106 apartments. Romania invest also owns a 271 apartment building in the Planorama project.

"I believe demand will grow faster than supply for at least the next three or five years, while, at the same time, I don't see any projects that are good enough to be completed and delivered, so that the shortage will remain significant," Hauge considers.

Romania Invest is conducting its investments through local banks and intends to have these lenders finance at least 75% of the investment value.

Romania Invest is not the only company with such a strategy on the domestic market, as other companies conduct similar operations.

"I know there are a few companies with similar businesses, but not identical. I have also heard a rumour that some investors intend to enter the market soon," Hauge adds.

Bucharest's residential market has been witnessing unprecedented development since 1989, with approximately 100 projects announced in the Bucharest and around the city within the last few years. The slow rate of completion of these homes, which has failed to keep up with demand, has pushed the average price per square metre to around 1,500-1,700 euros.

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