Thursday, December 4, 2008

Colliers cancels contracts for five projects

Colliers International real estate consultancy, the biggest player on the domestic market, has cancelled contracts for the sale of five housing complexes of its portfolio in the last few months, including a total of 5,000 housing units, which were due to be developed over several years.  More specifically, Colliers is no longer a sales agent for FeliCity and Garden of Eden projects developed by GTC, Stejarii developed by Tiriac, Silver Mountain carried out by a firm controlled by businessman Dan Fischer, close to Poiana Brasov, as well as the 900-housing unit portfolio of Canadian Topolinski, put out for sale under Benevo brand.

"(...) Developers pay us on the basis of some success fees, and as sales have been weak lately, we, as well as they, were in a delicate situation," explains Ilinca Paun, head of Colliers' residential department.

Colliers would have generated over 5m euros over several years from the sale of the 5,000 housing units, taking into account an average price of 100,000 euros and a 1% fee for the company. This value is estimative, though.

The company still holds a significant portfolio of housing projects. A lot of developers delayed some projects this autumn amid the low level of sales, a reason why Colliers is also focusing on related services on the housing market, such as project marketing, research or even the improvement of the image of some projects harmed by the crisis.

While the level of sales on the housing market was below the 2007 one, Colliers' housing department has seen revenues rise by 25% so far, inclusively due to a series of contracts signed in 2007 and cashed in this year.

"In 2009 we'll probably see revenues generated by the housing market go down. It will be a difficult year, with part of people no longer able to take out loans, there will be panic related to the general trend of the economy and if the unemployment rate goes up, people will pay more attention to how they spend their money. Still, after European countries come out of recession, the accumulated pressure will lead to market growth," says Paun.

"We have sufficient resources to keep people in the firm for some time, until the housing market rebounds," said Paun.

Colliers in 2007 posted 21.2m-euro revenues and 7.3m-euro income, a level hard to reach this year, says Bogdan Georgescu, managing partner with the firm.



Friday, November 7, 2008

Prices of old apartments in Bucharest continue to fall

Prices of old flats in Bucharest continued to go down in October, by 6% compared with the previous month and by 16% compared with the beginning of the year, reveals the Bucharest Real Estate Index (BREI), put together by real estate consultancy Colliers International.

The average price of old flats in Bucharest has therefore reached 1,576 euros/square metre, with the most important depreciation occurring in sector six, which comprises districts such as Militari and Crangasi, where prices reached 1,310 euros/square metre, as a result of an almost 13% decline.

On the other hand, according to the ZF real estate index which takes into account the asking prices on the website, three-room flats in Bucharest have dropped by 12% since the beginning of the year, while in some areas the decline was as steep as 20% (Iancului, Mihai Bravu, Oltenitei).

The price of new flats remained at the same level in September and October, according to BREI, although a series of smaller companies announced price cuts or various incentives to help facilitate buying a home.

"Although the asking price remains constant, developers continue with the promotional offers of the summer or launch new ones to boost sales," Colliers officials note. The price drops were caused by the low volume of sales in the last few months, due to both the financial situation that led to higher interests rates and harsher lending terms and to the expectations of the potential buyers that prices would fall, influenced by the situation on the foreign markets.

In addition, a large part of the demand would come from speculative investors until recently, who have, however, reduced their operations significantly.

However, not all the prices of old flats fell, as there are still some owners who keep asking for the same prices, without closing a deal.

"The supply is no longer uniform but divided into two segments; those who keep the prices close to the values of the previous month and those who cut some of the price in the hope they would close a deal. We are therefore seeing a dispute on the market related to the minimal threshold that prices could reach," Colliers officials add.

Although the number of sale-purchase deals went down, real estate consultants have noticed a rise in the number of lease contracts, of some 15% compared with the summer of 2007.

"This autumn, many of the clients looking to buy a home, either no longer had access to loans, or were confused by the situation of the market and decided to rent at least for a while," says Adrian Ghimpau, head of the residential department of the Coldwell Banker Affiliates of Romania.



Thursday, October 30, 2008

10% price-cut from owners after negotiations

The negotiation margin trading in residential real estate transactions reached about 10% in September, in most cities in the country, which indicates the continuation of a downwards trend of the real estate market, informs a release of the real estate network RE / MAX Romania. The negotiation margin represents the difference between the price initially asked by the owner (the list price of the property) and the price at which the transaction is concluded.

"Compared to June, the negotiation availability of both parties increased, thus transactions were recorded under the list prices, negotiations over 10% being seldom met today," said Mihaela Alexandroiu, Broker / Owner RE / MAX Bastion, Bucharest. She added that, also as compared to June, the list price dropped by 5-10% for the new apartments and by about 15% in the case of the old ones, while the trading price dropped by 10-20%, which means a cumulative price drop of 15-35%. "As particularly regards the capital, I estimate a decrease in prices of up to 25% in the case of new projects that have sold less than 50% of the units built," Mihaela Alexandroiu also said.

The situation is similar in other cities, too, the list prices continuing their downward trend. In Arad, both the list and the trading prices fell by 5% each, as compared to June, while in Brasov list prices have dropped by 10% for the old apartments and even by 20% for the new ones, while the negotiation margin reached 10%. The same 10% negotiation margin is also registered in Timişoara, Cluj-Napoca and Bacău. In Piteşti, the prices of old apartments have dropped by 15-25%, those of the new apartments remained at 950-1200 euros/sqm, and the trading margin is one of the highest, respectively 8 - 12%.

As regards the number of transactions, in Bucharest they have seen a slight increase in September, as against August, but the RE / MAX specialists say that this phenomenon occurs each year after the summer months. While a similar trend occurred in Braşov, where falling prices recorded this summer have slightly stimulated transactions in September, in other cities (Cluj-Napoca, Constanţa, Piteşti, Timişoara, etc.), the number of transactions has not increased after the first autumn month, against the backdrop of the global credit crisis and increased interests rates at national level".



Tuesday, October 28, 2008

Becali expects land prices to double in five years

Businessman George Becali, owner of the Steaua soccer club and one of the top land owners in Bucharest, said he was no longer interested in acquisitions since the outburst of the crisis, but is not willing to lower prices for land he plans to sell, although he currently has no buyers.

 “I am only selling, but will not lower prices. I am negotiating with speculators who want to buy cheaper land. I can hold on to that land, because there is no pressure on me to sell,” Becali told Business Standard. He expects to have more clients interested in that land next spring. 

With his Arcom construction company, he plans to build several residential buildings on part of the land. “I want to build apartments which I plan to sell at lower prices than those on the market, because I already have the land. After the buildings are finished, I will sell the land and the construction, and will make profit from the selling price,” he said. Becali added that he is not interested in other cities, because apartments there are much cheaper than in Bucharest, while construction costs are similar. 

Becali owns some 484 hectares of land, located on the outskirts of Bucharest and in the cities of Braila and Pitesti. In the past year alone, he earned some €100 million from selling several plots.



GTC: Funding for our ongoing projects is ensured

Representatives of Globe Trade Center (GTC), one of the leading real estate developers on the Romanian market, says the company's short term investments amount to 318m euros, with funding for ongoing projects being ensured. The company currently has two residential complexes under construction in Bucharest, shopping centres in Piatra-Neamt and Arad, as well as one of the leading office projects in Bucharest - City Gate, in Piata Presei Libere. The Romanian subsidiary is 46% held by GTC Real Estate, which is in turn controlled by Israeli group Kardan. The two companies are to merge by the end of the year, which will make Kardan a direct shareholder of the local subsidiary. GTC developer has become known in Romania mainly after building and selling office buildings Europe House and America House in Piata Victoriei for almost 150m euros.



Standard & Poor's has downgraded Romania's rating to BB+, with negative outlook

Financial rating agency Standard & Poor's has lowered its long-term foreign currency sovereign credit rating to "BB+" from "BBB" and to "B" from "A-" for short-term foreign currency sovereign credit. The outlook is negative in both cases.

On the other hand, the National Forecasting Commission has revised the estimates concerning 2009 economic growth downwards, from 6.5 percent to 6 percent, and anticipates a slowdown for every sector, given the international turmoil. Up until this autumn, most forecasts made every six months would be revised upwards.

"This is slight revision influenced by the international context and by an increased caution. We used multi-annual averages a lot to eliminate potential sources of imbalance in the supply-demand ratios and the potential inflationary pressures," CNP chairman Ion Ghizdeanu told ZF.
He explained that growth of the economy had multi-annual trends to avoid surprises from forecasts.

The Romanian economy sped up this year, performing in stark contrast with the economies in the euro zone that signalled that they had entered recession a few months ago. The economic growth in the first half stood at 8.8 percent compared with the same time last year; the yearend estimate is equally optimistic, of 9.1 percent of the Gross Domestic Product, given that the second half of the year usually has a greater contribution to the GDP formation. The analysts believe that CNP's adjustment of the economic growth is not substantial enough considering the risks related to financing and lending.

"Uncertainty is the word that best describes next year. Deviations can be very high. The main elements with an important impact on the GDP progress are the slowdown of lending and the recession in the euro zone. The growth pace of lending could go down from about 50 percent to 20 percent," says Ionut Dumitru, chief economist of Raiffeisen Bank.

The most important decline estimated for the constructions sector, where the growth pace will halve. As a result, this industry is expected to increase by 12.8 percent compared with 28.8 percent this year. The final version of the autumn forecast indicated a 4.7 percent increase of the industry and a 5.8 increase of services, while agriculture will grow by 3.5 percent, given a very good harvest in 2008.

Compared with the preliminary version of the forecast, published at the end of September, CNP has revised estimates about the industrial sector downward both for 2009 and for 2008, as well.
The industry is expected to grow by 4.8 percent compared with 5.4 percent in the previous forecast.

The impact of international turmoil will also show among consumers, with consumption exuberance to go down, which is not that bad, considering the exaggerated growth of consumption lately. CNP estimates consumption to slow down significantly, from 10 percent increase in 2008 to 7.1 percent in 2009.

This is a substantial revision of the data, compared with the preliminary forecast that indicated an 11 percent increase for this year and of 7.6 percent for next year.

The acceleration of the economic growth was alarming for NBR, given the inflationary pressures it generates.

The final autumn forecast changes the data for this year's inflation upwards from 5.8 percent to 6 percent but maintains next year's estimate at 4.5 percent.



Wednesday, October 15, 2008

Immoeast's capitalisation drops to 800 million euros, fund plans property sale

Austrian investment fund Immoeast, the top buyer of real estate assets in Romania in recent years, will start selling some of these assets on the Romanian market, where it owns properties that were assessed at 3.4 billion euros at the end of June.

The capitalisation of Immoeast on the Vienna Stock Exchange reached approximately 800 million euros, down 87% from the same time last year when the market value of the company exceeded six billion euros.

At the same time, the market value of the properties held by the fund was valued at 10.9 billion euros at the end of June, that is in the first financial quarter of the company.

"After years of dynamic expansion, the group's focus will shift towards consolidation and modification of financial structures. Moreover, we will focus on steps to ensure liquidity by slashing the number of development projects and by the sale of other properties in our portfolio," said Thomas Kleibl, the new spokesman of Immoeast's board of directors, who replaced Karl Petrikovics at the helm of the fund.

Properties are to be sold in Romania, too, sources on the real estate market say, with this country being Immoeast's most important market and accounting for 31.6% of its entire portfolio. After the decline on the stock market, Immoeast has reduced its chances of raising cash from the capital market.

The company's debts amounted to 1.64 billion euros at the end of July, and average repayment term was 5.2 years. The banks Immoeast worked with to finance its investments include Erste Bank, Raiffeisen (RZB), Bank Austria Creditanstalt, Hypo Real Estate and Investkredit.

The most important operational properties that Immoeast holds in Romania include IRIDE, S-Park and Victoria Park business parks, Bucharest Airport Tower and Bucharest Corporate Center office buildings in Bucharest, several shopping complexes - Polus Center in Cluj, Armonia Center in Arad and Euromall Pitesti and a number of logistics centres. The company also owns interests in a number of real estate development companies that operate in Romania, as well, such as Adama Holding, TriGranit and Caterata and has several properties in development under a forward-purchase contract, such as the World Trade Center project in Constanta, Gold Plaza shopping complex in Baia Mare and Euromall Galati.

Real estate companies are being badly hurt by the international financial crisis, all the more so if they are listed on capital markets, considering the negative trend of the stock markets over the last few months.



Monday, October 6, 2008

Prices of one-room and two-room apartments dropped by over 10%

The global financial crisis determined an accentuated drop in prices and an increase in the sales offer. Thus, from March until now, one-room apartment prices have dropped by almost 10%, while two-room apartment prices by 12.6%.
According to the latest report of, September marks a significant increase in offers on the apartment sales market, but also a decrease in prices for the seventh consecutive month. "The prices required by owners for their apartments in Bucharest are lower and lower, many of them willing to sell their apartments in order to avoid the risk of higher losses in the next period," says the General Manager of, Silvia Vîlceanu.
She also says that, for the real estate market, March is a line of demarcation between the period of spectacular growths and the start of the real estate crisis. "This month is not only the period with the most sales offers, but also with the highest prices for all types of buildings. From March until now, one-room apartment prices have fallen by almost 10%, registering, for the first time this year, a decrease under 70,000 euros. Similarly, two-room apartments have lost 12.6% of the price asked in March, having been put up for sale at an average value of 107,162 euros, in September", Vîlceanu added. At the same time, the four-room apartments are the only apartments that have not changed their market price, as against March, however they see a dramatic drop compared to last month, when their value decreased by 6.8%. "We estimate that, by the end of the year, old apartments market will not register a stabilisation in the number of offers, given that the sale decision is generally influenced by the evolution of the market. The financial instability of the international markets will also produce effects on the Romanian real estate market, through a continuous decline in old apartment prices", considers the General Manager of According to the monitoring report conducted by, the sales offer for old apartments increased by 40%, as compared to September last year, and last month, the Bucharesters put up for sale 3621 apartments, while last year in September, the offer was only 2574 housing units.



Tuesday, September 30, 2008

Popp, Impact: Apartment prices could fall by 16% if Government cancels VAT

The price of apartments could fall by 16% if the government cancelled the VAT, and by 5% if the private sector and the entrepreneurs reduced the profit margin by a third, said on Tuesday, Dan Ioan Popp, President of Impact Developer and Contractor.

Similarly, if the government and the local authorities invested in utilities and public services in the proximity of residential districts, the price would fall by 12%, and if they offered free land for the construction of housing, prices would drop by 10%, said Popp, at the conference "Romania Construct and Real Estate Forum 2008".

"A major contributor to the actual final price borne by the buyer customer should be added: the bank, by the financing costs. The annual interest rate, cut from 15 to 10%, applied to a credit for 20 years, reduces the total cost of the apartment by about 30%", said Popp, who added that there are sub-variants of involving those responsible for price reductions.

Thus, if the VAT were reduced to 5% and the collected amount were returned by the government to the constructors and developers, they could increase wages for construction workers and specialists by about 30%.

Also, apartment prices could fall if the government and the authorities redeemed or bought at market prices the investments in utilities, schools, kindergartens and dispensaries, made by developers in residential districts or bought from the market land plots to be supplied to the population or the developers, free of charge or at low prices, for the construction of apartments.
At the same time, prices could drop "if the Romanian state (...) begins to charge a intermediation / outsourcing fee from the state where the Romanian citizens emigrated, and now makes practically free use of the resources built on the public budget of Romanians" Popp continued.
In his opinion, the collected amounts should be used in areas where the biggest labour deficiencies are found, in order to keep the workers or to attract substitutes from rural areas, or immigrants.

"We believe that the world financial-banking crisis will determine a decrease in the share of investment in construction", says Popp.

By now, Impact Developer and Contractor has invested about 20 million euro in public utilities and units providing public services in over 20 housing ensembles.



Friday, September 26, 2008

Real estate transaction value fell by 43% in H1, to 902 million euros

The real estate transactions carried out in the first half of the year totalled 902 million, down by 43% over the same period last year, Romania ranking second among the countries of the region, in terms of operation value, according to a survey of the company Jones Lang LaSalle.

"The total value of real estate transactions in the first half of 2008 in Romania fell as against the record level of 2007, the investment activity as measured by the number of concluded transactions being particularly affected. The volume of transactions for the first half of 2008 was 902 million euros, representing a 43% drop, as compared to the same period last year, namely before the global financial crisis, shown in the Bucharest City Report of the real estate company Jones Lang LaSalle.

In the first half, transfers of high-value property dominated the Romanian real estate market. Thus, four transactions, in a total amount of 750 million euros, represented more than 80% of the total investment volume.

The biggest transaction was the purchase of the Upground Estates project in Bucharest by the RREEF Fund, in amount of 340 million euros.

Also, three other significant transactions were concluded, aimed at finalised projects: Italian group IGD acquired the Winmarkt portfolio for 182.5 million euros, AEW Europe bought from BelRom the European Retail Park Târgu Mureş for 90 million euros, and DEGI took over the Iris Shopping Center from local developer Avrig 35 for 140 million euros.

The causes for real estate transaction value drops are, according to Jones Lang LaSalle, the global financial crisis, which continues to restrict the ability of some buyers to obtain good financing conditions, and the large supply of spaces, leading to an increased competition between Central and Eastern Europe products and those from Western Europe to attract investors.

"Despite lower investment activity at present, the Romanian real estate continues to show very strong foundations. The demand for space from tenants continues to be very solid", reads the report. Under these circumstances, investment yields continued to grow, those for "premium" office buildings being around the value of 6.5%, while for retail they are 6.75% and for logistics spaces have reached 8%.



Thursday, August 28, 2008

2008 will be the first difficult year for real estate consultants

The top five real estate consultancy companies in terms of turnover posted an over 26% profit margin last year, while turnover doubled (49 million euros in revenues). However, the growth rate is expected to slow down significantly this year, following the international credit crunch that has affected the domestic real estate market.

"This is a difficult year, in which three markets are slowing down and are not performing as well as they did last year. We continued to grow in the first half, but the problems on the market in the first six months will catch up with us in the second half. This goes for the entire market, but, speaking exclusively about Colliers, we set out, conservatively, to reach the same turnover and profit as in 2007," states Bogdan Georgescu, managing partner and shareholder of Colliers International.

Colliers posted 21.2 million-euro revenues and 7.3 million euros in profit and was also the market leader in 2007, according to data on the Economy and Finance Ministry's website.

Number two on the market was CBRE Eurisko, whose business stood at 14.4 million euros and profit reached 3 million euros, while Jones Lang LaSalle ranked third in the first year since its comeback on the market, with 4.6 million-euro revenues and 1 million-euro profit.

The other top five companies are Cushman & Wakefield Activ Consulting (4.5 million-euro business and 1.2 million-euro profit) and DTZ Echinox (4.3 million-euro business and 0.4 million-euro profit), so that this is the first year when companies that belong to international networks exclusively dominate the market, after CB Richard Ellis bought Eurisko Consulting at the beginning of the year and Regatta failed to make the top five.

After Eurisko posted over 150% business growth in 2007, the company's officials would not go into details about this year's targets.

"Whereas early in the year, we stated we set out to attain 40% growth, I can only say that the target remains the same. It remains to be seen whether we reach it or exceed it, but I do not want to comment too much on the subject until the end of the year when we draw the line," states Radu Lucianu, managing director of CBRE Eurisko.

The cumulated profits of the five companies amounted to 12.9 million euros in 2007, which made real estate consultancy one of the most profitable service businesses.

The market is affected by the decline in the sale of flats this year, as well as by the apathy of the real estate mergers and acquisitions segment, as only a few major deals were concluded, generally without real estate consultants. One of the few exceptions was the sale of the Iris Shopping Centre in Titan district of Bucharest, where CBRE Eurisko assisted the buyers, DEGI.



Wednesday, July 30, 2008

Price of flats in Bucharest continues to fall

The prices of flats in Bucharest fell by 5% from January through to July this year, as a result of the reduction of prices especially over the last two months, the ZF index reveals. The price a of three-room flat in the capital, built between 1980 and 1990, went down by 3% on average in July, after the average price per square metre reached 1,920 euros, compared with 1,976 euros in June, according to the real estate index put together by ZF based on sale prices displayed on website. "Prices continue to go down, and as far as deals are concerned, they are at 25% of what they were at the beginning of the year," said Gabriel Dragomir, senior broker of real estate agency Indoors Real Estate Group. June and July were the first months in the last few years when asking prices went down, according to the ZF research. Asking prices can be as much as 20% higher than those at which deals are actually struck.



Tuesday, July 29, 2008

Housing sales crisis forces developers to offer €10,000 discounts

The drop in sales of new apartments in the first half of this year has forced real estate developers building for the middle class to offer discounts or promotional objects worth €5,000-€10,000 of the price of the sale, according to main players on the local real estate market. Bonuses can be in the form of a Logan car, a bicycle, kitchen furniture, or even a holiday.

Sales of new apartments dropped by some 50 percent in the first six months, compared to the monthly average in 2007. April and May were critical, because rumors started circulating at the beginning of the year, especially in February and March, about a Real estate market crisis.

“Some 80 percent of developers are offering discounts worth €5,000-€10,000. Promotional offers are meant to stimulate sales and enable the developer to meet his plan for which a financing contract was signed. Normally, as soon as developers obtain financing from the bank, the latter insists on the sale of a certain number of apartments within a given period, in order to qualify for the rest of the loan,” according to a declaration for Business Standard by Ilinca Paun, Director of the Residential Division of the Colliers International real estate advisory company.



Monday, July 28, 2008

Notaries: Real estate deals down by 5% in June

The number of deals on the domestic real estate market has gone down over the last two months, by as much as 5% in June, compared with the same time last year, according to the data the National Union of Notaries Public of Romania (UNNPR) sent to ZF. After growth rates of 10.3%, 32.3%, 11.2% and 22.5% from January through to April compared with the same time last year, the number real estate deals fell in May and June by 3.5% and 5.3%. Therefore notaries certified 43,196 deals in May, compared with 44,749 in May 2007, and the number of transactions involving buildings fell to 40,383 in June, compared with 42,648 in June 2007. Over the last few months, the real estate market slowed down as a result of the bad news concerning the money troubles of some foreign funds, as well as expectations created on the market about price declines due to the new lending restrictions prepared by the NBR and to the increase in rates on RON and euros.



Friday, July 25, 2008

Bulgaria's real estate market: Romanians invest in apartments at the seaside

Dozens of Romanians have bought luxury apartments in famous Bulgarian seaside resorts. With only 75,000 euro the price for a one room apartment in Bucharest, people can buy two for this price in one Bulgarian seaside resort, Golden Sands. Another option in Bulgaria is in Ruse, the closest city to the Romanian border south of Bucharest, where a house is sold with 5,000 euro. In Ruse real estate agents complain that Romanians doubled the household prices. Even so, the most expensive apartments there do no exceed 60,000 euro.

In Romania, Bulgarian households can be purchased through the real estate company Bulgariainvest. Director Andrei Muresan says that so far his company sold 50 apartments in Sunny Beach and Golden Sands - top destinations on the Bulgarian seaside.

Romanians who bought an apartment over there declare that they now have a house for holidays but also a very good investment. They declared that they might even consider renting or selling, depending on how the market changes.

In Ruse, Romanians invest in houses. Aleksander Iordanov and his family own the oldest real estate company in Ruse. He declared that in the last period, he sold dozens of properties to Romanian customers.

He adds that those buying do not live there but they consider that in a few years, they will be able to sell at a better price and earn some good profits. The area has great potential, especially that more and more Romanians are tempted to buy there. Even now, there are some 2 million Romanians who would rather shop in Ruse than in Romania.



Sunday, July 20, 2008

Constanda sells 1.63 ha of French Village for 68m euros

Businessman Constantin Constanda has received around 68 million euros from the sale of 1.63 hectares of land in Satul Francez (French Village) to Greek firm Raptis Kavouras, a deal that put the entire 2.8-hectare plot owned by Constanda at 120 million euros. In March, in one of the biggest scandals on the real estate market, Constanda became part owner in the French Village in exchange for Bordei Park with the Bucharest City Hall.

He acquired the park from two individuals, who had bought it from the two people it had been given back to, Dumitru Tudor and Eugen Lincaru. Constanda could not be contacted by the time this issue was ready for print.

The purchased lot includes nine villas whose rental contracts range from 2,000 to 4,000 dollars and will expire by next spring. "We probably won't start working on the new project until next year, while a team of architects has already started design work. The owner did not wish to sell everything, but we might buy the rest, as well," Lucian Mateescu, general manager of Raptis Kavouras, told ZF.

At a price of 4,200 euros/square metre, the sale of the land which houses Satul Francez (French Village) is a record deal on the segment of large plots, located in luxury areas of Bucharest.

Negotiations for the 16,300 square metre plot took less than two months, but a price was decided on in just ten minutes, although the starting price was less than 10% higher than the value of the transaction.

"This was a transaction that we worked on day and night, and in the last three days the final details were discussed for 50 hours. We really wanted this land, and, according to our information, at least three other companies were also interested. Price negotiations started from 4,500 euros/square metre, but it only took around 5 minutes to make a decision," said Mateescu.

Mateescu met Constanda on May 22, while the deal occurred less than two months later on July 15, during a period when big real estate deals are rare.

"When it comes to prices of tens of millions of euros, the market is not overcrowded with buyers under the current conditions, so this is not exactly perfect timing. On the other hand, we believed the position of the land is unique, because there aren't any other large plots in the central-northern part of the city," added Mateescu.



Thursday, July 17, 2008

Time taken to sell houses up 20% in last six months

The average period in which a real estate property is put up for sale and finally gets to be traded grew by 20% in the last six months, according to representatives of the real estate company RE/MAX Romania.

"The average time for the sale of real estate properties grew by 20% in the last six months, reaching even up to 12 weeks. However, if the selling price is 10 to 30% below current prices in the market, the building or the dwelling sells within 30 days. We had cases in the RE/MAX network when, in the same conditions, the properties were sold in 5 days", said Paul Dumbrăvanu, Broker/ Owner of real estate agency RE/MAX Star.

According to the RE/MAX statistics, the period during which a property enjoys maximum interest from the potential buyers is five weeks, at present. "After this time limit, the interest of the buyers for the property drops to around 15%, starting from the 7th week of stationing in the market, requiring the repositioning of the property in terms of price, so that the interest for it would rise again", is the opinion of Dan Tărăcilă from RE/MAX Star.

According to RE/MAX representatives, real estate assessment is carried out through three main methods and techniques: direct comparison method (the estimation of the market value is made by comparing it to similar properties, this technique offering a fairly accurate picture of the value of real estate), the cost method (which estimates the cost to construct the existing building and then deducts the depreciation of the evaluated property, estimated at the date of the evaluation) and, respectively, the yield method (the property is considered as an investment that generates an income).

RE/MAX Romania registered a growth of over 100% in its office network, in the last 12 months, from 11 offices in June 2007, to 23 active offices in the same month of this year, other offices already being under establishment. As regards the number of real estate agents, RE/MAX Romania had a total of five agents in January 2007, while their number amounted to 43 in June 2007. Over the last 12 months, the number of RE/MAX real estate agents increased by 147%, currently amounting to 109.

At global level, RE/MAX is one of the leaders in real estate sales, according to independent statistics conducted in this industry: a RE/MAX real estate agent trades, on average, 4.5 million dollars a year.



Martinsa-Fadesa Romanian project still unaffected

Spanish construction and real estate development group Martinsa-Fadesa, which operates on the Romanian market, has become the first Spanish publicly listed company forced to seek bankruptcy protection after failing to get a loan to refinance debt. The firm has an ongoing one billion-euro project in Stefanestii de Jos, close to Bucharest. So the question is: what will happen next? The group was unable to get a 150 million-euro loan, which it needed for cash and the continued normal development of projects, as announced by its officials. The firm entered Romania in 1998, when it bought the majority interest in wood processing company Diana Forest based in Bacau from the state. Martinsa-Fadesa sold the company for 23 million euros to Polish flooring and parquetry manufacturer Barlinek early this year. Also at the beginning of this year it started construction works on its biggest development in Romania, Bonaire Community City in Stefanestii de Jos. The project was meant to include 7,600 flats, a hotel, office space and retail space and is the biggest residential complex announced in Romania so far. "In principle, the projects announced are still happening, considering we use different financing sources than the company in Spain, especially from banks. What we can say is that the situation in Spain is not affecting us for the time being," say the representatives of Martinsa-Fadesa in Romania.



Tuesday, July 15, 2008

Three-room flats in Bucharest become increasingly harder to sell

The average price of old flats in Bucharest fell 12% on the average in the second quarter of the year, due to the lack of interest in such homes, reveals an analysis by website, which brokers direct real estate deals. As a result of the decline in demand, it now takes up to sixty days to sell a three-room flat. The most severe decrease in prices was that of two-room flats, which became 13% cheaper compared with the first quarter and now cost less than 120,000 euros, down from 136,000 euros. The studios and three-room flats prices went down by 10%, according to the same source. Therefore the average price of a studio fell from 86,500 euros to 78,160 euros and a three-room flat from 177,000 euros to 159,800 euros. The supply of old homes increased significantly against the same period in 2007 (51%), but fell against the first quarter of the year, by 34%, mainly because of the seasonal nature of the market, which peaks in February-March and September-November.



Monday, July 14, 2008

65,000 new apartments to be delivered in next 3-5 years

The number of new apartments to be delivered in the next 3-5 years will amount to about 65,000, but housing needs will not be covered, the ratio being currently estimated at one housing unit for five applications in Bucharest, shows a survey conducted by analysts of the Regatta real estate company.

According to this study, the North area of capital owns a percentage of 38.10% of the total units to be available in the next three-five years, which means 24,750 units. "In the North there are ample areas of land and the projects in the area include large-size residential ensembles of up to 4,600 units, which have complex concepts such as Cosmopolis or the Băneasa project, which cover vast areas, but also small-sized buildings and small, with an intimate character, with less than 50 units," say the analysts of the real estate company.

In the western area, developers have made full use of the available plots to achieve large-size residential ensembles, which offer between 2,000 and 2,700 units, such as those in Drumul Taberei, just over 1,000 in Military or Semănătoarea, but also buildings with a small number of units (between 88 and 465), such as Champions Residence, opposite the Ghencea Stadium. The total area includes 14,737 units, namely 22.68% of the total supply for Bucharest.

In the east, the most dynamic area is the Titan district, an area where competition is very high, providing varied offers. At the same time, the Dristor, Obor, Colentina and Pantelimon areas develop, offering together a total of 17,499 units. This figure represents 26.93% of total apartments announced in the market.

"As expected, the South begins to transform, the accentuated industrial profile starting to be balanced by the need for residential. Several new residential projects are expected here, an essential factor being the relatively low price of land. For now, the started projects represent a percentage of 6.38% through the 4147 units available in areas such as Constantin Brâncoveanu, Piaţa Sudului, Berceni, Tineretului or Splaiul Unirii. The biggest residential ensemble in the south currently provides 1,680 units and is located in the Splaiul Unirii area. Further development of large projects is expected in the area, as the space favourable to developments is still available here, the Regatta study also shows.

Regarding the downtown area of the Capital, real estate analysts consider that the lack of land is more than obvious and thus the percentage of residential developments in the area is only 5.88% of the total.



One-bedroom apartments cheaper in Q2

The price of older apartments in Bucharest dropped 12 percent in the second quarter, compared to Q1 2008. The most significant decline in prices was registered for one-bedroom apartments, at 13 percent, according to representatives of real estate portal.

“The average price of an old apartment in Bucharest was €119,000 in the second quarter of 2008,” according to a press release. The price is similar to the level registered in December 2007.

According to the Bucharest Real Estate index, compiled by Colliers International real estate consulting company, the price of old Bucharest apartments has been shifting since the beginning of 2008, with a 5 percent monthly decrease in May. The new apartment index amounted to €1,909 per square meter, the same level as in April 2008, while that for old apartments dropped to €1,808 per sqm, from €1,892 per sqm in April. This is due to fewer transactions on the market in April and May.



Wednesday, July 9, 2008

Developers deliver fewer flats than promised for H1

Approximately 1,200 new flats that had been scheduled for delivery in the first half of this year have been delayed, as the construction market is experiencing a serious personnel shortage, the weather in the winter was worse than during last year's winter and construction permits were issued later than they were supposed to.

The projects that had been expected to be delivered in the first half of this year include complexes like Planorama (Colentina), Residenz (Chitila), Primavara (Drumul Taberei) and Ibiza Sol (Pipera), which are multi-stage developments. They have all been pushed back by three months on the average.

One of the first large complexes started in Bucharest was Planorama, in the Colentina district, comprising four blocks with a total of more than 1,000 flats.

"The first block of 280 flats should start being delivered in August. They have been working twenty four hours a day but the volume was extremely high and personnel turnover in constructions is high," explains Ionut Botea, sales consultant of Prime Location, which handles the sale of the homes in this project.

The first delivery deadline had been set for the end of 2007, after which developer Euro Habitat announced the first block would be delivered in April this year. For each day of delay those who bought homes in this project will be reimbursed 0.02% of the acquisition price of the flat, which may amount to over 5% for those who bought off-plan.

On the other hand, buyers of the first stage of the Residenz complex in Chitila, developed by Tiriac Imobiliare and LBBW, are already moving in the 136 homes, though three months later than they were initially supposed to, that is March 2008.

"Residenz clients of the first phase are already moving in their flats and we anticipate to have them all moved in by the end of August, as final sale-purchase deeds are completed. We delayed the first phase by three months because we were unable to find skilled workers all the time," says Ruxandra Buca-Chendi, marketing manager of Tiriac Imobiliare. Delays happen at a time when the number of flats completed in Bucharest has been very low in recent years. The main projects that were delivered include Central Park, Quadra Place and Emerald Residences. However, a record number of homes are scheduled for delivery on the Bucharest market by the end of the year, approximately 6,000, double the number delivered last year.

Besides workforce problems, a series of developers have also had trouble getting their construction permits, which caused even more delays to their projects. Therefore, out of the 104 flats of the Ibiza Sol project that were supposed to be delivered in March, only 50 have been turned over to their owners, with deliveries starting at the end of June.

"Works fell behind the original schedule, because it took two months more to get the construction permit. It was supposed to be issued at the beginning of June 2006, so that works could begin in July 2006, but the Voluntari Town Hall only issued it on September 4, 2006," explains Alexandra Moldovan, marketing officer of Spain-based Ibiza House company.



Old apartments in sector one are 7% cheaper

Prices of old apartments in Bucharest went down by less than 1% in June this year compared with the previous month, with the most significant decline being reported for homes in the Capital's sector one (-7%), according to the real estate index set up by real estate consultancy Colliers International. The average price of old homes in Bucharest reached 1,794 euros/square metre in June, compared with 1,808 euros/square metre in May, while apartments in sector one of the Capital, which includes districts such as Dorobanti, Aviatiei and Baneasa, reached 2,061 euros/square metre, following the price decline. According to the real estate index put together by ZIARUL FINANCIAR, apartments in the Aviatiei district became 23% cheaper in June, while in Dorobanti, prices asked by buyers were 16% lower than in May. However, apartments in the sector one of Bucharest (which covers the Northern part of Bucharest) remain the most expensive in the capital, with the second most expensive sector being the sector four, which includes districts such as Tineretului and Berceni, where the average price is 1,995 euros/square metre, according to Colliers.



Central Bank hits the breaks on the credits market, new rules imposed

Romania Central Bank (BNR) tries to slow down the pace on the fast growing credit market, suggesting a new set of regulations designed to harden the already constrictive conditions in which credits may be obtained. BNR suggests that the banks and other financial institutions take into account a maximum of 20% larger income than the one declared for taxes in the previous year, instead of considering the income evidence issued by companies or other similar documents.

In a previous set of measures, BNR increased the key interest rate six times in nine months, up to 10%, the largest figure since August 2005.

BNR also suggests banks to introduce a new element, called "stress test", to evaluate the credit refund capacity in inauspicious circumstances. The draft issued by BNR is opened for public debate until July 16. Banks may have to adopt the new rules within 45 days after they are approved.



Tuesday, July 8, 2008

Bucharest apartment prices continue to drop

Apartment prices in Bucharest continued their downward trend in June this year, dropping 6.2% as compared to May, according to a private report set up by, Romanian news agency NewsIn informs. The system supervises real estate ads published by private people both in newspapers and on the web. On Tuesday, real estate company Colliers International announced that apartment prices in Bucharest dropped by 1%. Both monitoring systems report that prices, even so, are higher than the ones registered in the same period last year.

Most apartments on sale in Bucharest are two room apartments which on average are sold with 114,000 euro, a 2,000 euro decrease as compared to May. Even so, apartments are still 34% more expensive than a year ago.

Colliers International data show significant price decreases in June this year. Their Bucharest Real Estate Index registered a value of 1834 euro/sq. meter, a 9 units drop as compared to its value in May.

Thus, despite the fact that prices decrease, apartments are still expensive. According to the real estate company, as compared to last year, apartments are 15% more expensive.



Monday, June 23, 2008

Will apartment prices in Bucharest continue to fall?

The prices of old apartments in Bucharest saw the first declines in the first half of the year, and the trend could continue over the next few months, amid a reluctance manifested by potential buyers, due to the price boom seen over the last few years. "Prices of old apartments rose above the affordability of a regular family, and a whole category of buyers will not to pay such high prices for homes, which will cost less in ten years' time," says Calin Clinciu, development manager of real estate consultancy Euroest. "I think half the supply on the old apartment market was artificial, in that many people who did not intend to go through with the sale, put the homes up for sale at very high prices," according to Ionut Bordei, manager of the residential department of real estate consultancy CB Richard Ellis Eurisko. Clinciu believes the overall growth of the market caught up with these high asking prices after a few months, and this is how prices reached non-realistic levels, according to some consultants. As for new apartments, despite the decline in the number of deals for some projects, prices are not going down, except in the case of overvalued projects.



Wednesday, June 18, 2008

Apartment prices in Aviatiei, Dorobanti and near Vitan Mall, down 20%

Apartment prices in three of the most expensive areas in Bucharest have seen dramatic falls of around 20% over the last month, according to a ZF analysis, based on sales advertised on website Whilst in May an 80 square-metre apartment in the Aviatiei district exceeded 200,000 euros, prices dropped to 170,000 euros in June. The ads reviewed, which consider three-room apartments built in the 1980-1990 period, do not provide the price of transactions, but give a general overview of the Bucharest real estate market. A possible explanation would be buyers' preference for new apartments rather than ones located in central areas. 6,000 homes are expected for completion this year, according to a ZF research, after 2,541 homes were delivered onto the market last year, according to the National Statistics Institute. The major price declines in some of the most expensive areas of Bucharest, such as Aviatiei, Dorobanti and near Vitan Mall (photo), come amid a lowering in the average price per square metre, which fell to under 2,000 euros, compared with 2,100 euros a month ago. For a 60 square-metre apartment, this means a saving of around 6,000 euros. Last month's decline, as well as the slower growth seen in the first quarter of the year, comes after a period during which building prices boomed. Apartment prices almost tripled between 2004 and 2007, with the biggest rise of around 65% witnessed in 2005. Therefore, 2008 could be the first year since 2004 when prices could either stagnate or rise by less than 10%.



Friday, June 13, 2008

Colliers: Old apartment prices in Bucharest down while new apartments stagnated in May this year

Prices of old apartments in Romania capital Bucharest dropped by an average of 5% in May this year as compared to April as a result of fewer transactions on the market, according to a monthly analysis by real estate consultancy company Colliers Residential Division. The data show a stagnation of prices for new apartments in Bucharest for the same period.

The monthly real estate index BREI launched by the company recently, the only Bucharest district to report an improvement of prices is District 3 - but the boost is limited to 2%.

District 6 has the lowest prices, according to the same report.



Tuesday, June 10, 2008

Romania Invest to continue to buy new apartments

Norwegian-based Romania Invest, which holds around 1,000 new apartments in Bucharest in its portfolio, has acquired 25 homes in the My Dream Residences project in the Pipera district, and intends to start selling the first homes in the Residenz project in the town of Chitila, when the construction is completed. In the My Dream project, the Norwegians mainly bought two and three-room apartments, in a transaction worth 4 to 5 million euros, with the sale of the 35 apartments they hold in Residenz to start in the coming two months. "We will continue to buy because we are certain the market will recover. We don't know exactly when - six months, a year - but the real estate market, like other markets, has a cyclical evolution. Moreover, under the current circumstances, it is easier for us to do good business financially, given that the market has become a buyers' market," Bjorn Hauge, country manager of Romania Invest, told ZF. The Norwegians have purchased homes in the Planorama, Residenz, Ten Blocks, Blue Tower, Vitan Platinum Towers and Armonia Titan projects at discount prices, which they were able to get due to the large number of housing units bought, and to the projects being in an early stage of development.



Tuesday, May 27, 2008

Bucharest Apartment Prices Saw First Decrease In Feb ‘08

Apartment prices in Romania’s capital city Bucharest have increased three times since January 1, 2005, but lowered this year in February, for the first time, according to the real estate index computed by global real estate services company Colliers International.
The company’s general manager, Bogdan Georgescu, told a press conference that February 2008 was the only month to see a decrease in house prices over the past three years.

Thus, the average price of an apartment in Bucharest reached EUR1,826/square meter in January, but lowered to EUR1,776 in February. Prices then climbed to EUR1,887 in March and to EUR1,888 in April.

Colliers officials estimate the prices of newly-built apartments will range between EUR1,150 and EUR2,200/square meter, VAT included, stressing the prices of old apartments might lower by 5 to 15%.

Late May, Colliers International launched a Romanian quarterly real estate index, the first of its kind in Romania, to keep track of the country’s booming real estate prices.

“This is the first real estate index in Romania and will measure the residential market in Bucharest. The Bucharest Real Estate Index, or BREI, will track the evolution of apartment prices in Bucharest,” Colliers said in a statement.



Prices for old flats in Bucharest fall by 10-15%

The prices of old flats in districts like Drumul Taberei and Militari in Bucharest have fallen by 10-15% since the beginning of the year, despite the fact that owners keep asking for the same prices, real estate market brokers say.

The representatives of the website, which is currently listing almost 3,000 homes, say the decline is the outcome of a shrinking solvent demand for homes in Bucharest, while the supply of both new homes and old homes is rising, considering some of the speculative investors put their flats up for sale at the beginning of this year.

"This used to be a sellers' market until recently, where prices would not be negotiated because no ad would stay up for more than two or three days without the home being sold. As a number of investors feel a degree of panic, we may now be talking about oversupply, considering the decline in the number of solvent buyers and the increase in the supply of homes," stated Matei Malos, the general manager of the company that owns the website. The supply of old flats increased by almost 50% in the first quarter of this year, after the number of homes put up for sale totalled almost 15,000.

However, the average asking price for old flats in Bucharest remains at 134,000 euros, the same as at the beginning of the year.

The price decline mostly affects the districts on the outskirts of the city, whereas prices in the central and prime central locations remain unchanged, given the constant supply.

"Those under pressure to sell generally agree to cut the price by 10 or 15% even in central areas, while those who are in no rush continue to ask for the same price. Last year was a very good year, but early this year we noticed a 20-30% decline in the number of deals," states Daniel Raeceanu, the general manager of real estate agency Rasig Group, which employs 36 real estate brokers.

The prices of old homes in Bucharest went up by almost 50% last year and the depreciation of the RON against the European currency, joined by the increase in interest rates, made it harder for buyers who took out loans to repay their instalments. "While the supply was low and demand was constant, owners drove prices up to a maximum that peaked at the end of last year. Seeing that the interest rate is no longer what it used to be, investors have panicked and lowered prices by 5-10% during the last two months, especially in low-cost districts," adds Claudiu Hategan, branch manager of the Opera Center branch of Coldwell Banker Affiliates of Romania, which brokers deals with homes in sectors 4,5, and 6 of the capital city (Berceni, Drumul Taberei, Militari).

According to the real estate index put together by ZF based on the offers on website, the average asking price for old three-room flats in Bucharest was 2,070 euros per square metre at the beginning of the year, an increase of 2% compared with the beginning of the year.

As far as new flats are concerned, 6,000 units are expected to be delivered this year, which could be a record on Bucharest's residential market, considering the number of flats completed over the last four years did not exceed 3,000 units a year.



Wednesday, May 14, 2008

Colliers to launch a real estate index for Bucharest in May

At the end of May, real estate consultant Colliers International will launch a quarterly real estate index, the first of this kind in Romania achieved by a company of this kind, which will monitor the evolution of housing prices in Bucharest.
"This is the first real estate index in Romania and will be a measuring tool for the evolution of Bucharest's residential market. The Bucharest Real Estate Index (BREI) will monitor the evolution of apartment prices in the Capital and represents a reference point in the professional development of Romania's real estate market", reads a Collier release. BREI will have 2005 as starting date for the analysis and will be published quarterly. The index will be launched at the end of May, together with a virtual real estate exchange through which those interested will be able to get familiarised with investments in these markets.
Colliers will provide more details about the Real Estate Exchange in the forthcoming days.
"If, until now, most opinions on the Romanian real estate market were mainly based on rumour or personal opinions, through this index we want to offer those interested in this dynamic market an objective instrument for the analysis of price evolution and future tendencies", declared in the release Colliers Real Estate Department Manager, Ilinca Păun.
The index was achieved by a team of consultants and analysts of the company and is based on eight secondary indicators that monitor price evolution in the six sectors of Bucharest, both for the older apartments in the blocks built before 1990, and for those in the new residential projects, built in the recent years.
Each sector was divided in districts, and for each district offers and transactions from certain areas were chosen, following a calculation algorithm based on the weight of sales according to quality and price. Also taken into account were the differences between the ways to measure and express areas, but also other factors that influence the apartments' final price per sq.m.
"We have obtained an indicator having at its basis the way to create capital market indicators in Europe, but which also takes into account the volume and the share of sales in certain areas, and the new deliveries of apartments in the market", said Călin Bucur, the coordinator of the group of analysts.



Wednesday, January 30, 2008

The price of new apartments in 5 areas of Bucharest to increase by some 30%

The price of new apartments in the Tineretului, Titan, Militari, Colentina and Berceni areas will register a significant rise by the end of the year, of some 10-20 percent, and in some cases even 25-30 percent, according to consultants with the EuroMetropola real estate company.

“For example, while the current price in Colentina is €1,400-1,800/per square meter constructed, by the end of 2008 apartments in new buildings could sell for €1,800-2,500/per square meter. Similarly, a rise of some 25 percent is also expected in the Berceni area, where prices now range from €1,300-1,400/per square meter, but will reach €1,500-1,800/per square meter,” said Valeria Tudor, representative of EuroMetropola. (NewsIn)