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.


source: http://www.curierulnational.ro/In%20brief/2008-10-01/Popp%2C+Impact%3A+Apartment+prices+could+fall+by+16%25+if+Government+cancels+VAT

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%.


Source: http://www.curierulnational.ro/In%20brief/2008-09-26/Real+estate+transaction+value+fell+by+43%25+in+H1%2C+to+902+million+euros