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.