Monday, February 16, 2009

Housing prices could fall by 30% more by end-year

Housing prices in Romania will continue to fall this year, according to real estate company Cushman & Wakefield, which estimates a 30% drop of current levels, while recommending for 2009 investments in properties generating high rents.

According to Cushman, old housing prices fell by 15% in the period September - December 2008, and the new ones by 5-10%, and a 10% decrease in price was registered at overall market level from the beginning of 2009.

"In total, we talk about a fall in prices of up to 35% since September 2008 to date. From September 2008 until now, 50% of apartments have been removed from sale and offered for rental. Under these circumstances, one cannot make a market price for apartments, so there is a possibility for it to fall another 30% over this year. Thus, a 65% decrease may be reached at the end of 2009", the manager of the company's evaluation department, Dan Ionaşcu, said in a release.

Most residential buildings have entered "conservation" and all the unstarted projects, in the project stage, or in the stage of obtaining approvals are offered for sale.

"These projects which were in the stage of planning and organisation and where construction has not started yet represent 70% of all the new projects, on which works started after 2006", the release reads.

On the other hand, the Cushman analysts believe that the small investors, who purchased a large share of the housing under construction in the past two years, will stand the test of the market crisis, because only 15% of those who contracted bank credits will have problems during this period because of the impossibility to reimburse funds.

At the same time, there are very many small investors who have contracted bank credits and therefore will not be so affected by what happens in the market, as they offer apartments for rental at moderate prices.

Similarly, in the residential segment, the most favoured will be the cities where unemployment is very low, respectively those that enjoy the investors' interest, such as Bucharest, Constanţa, Cluj Napoca and Braşov.



Sunday, February 8, 2009

BNP Paribas: real estate assets in Romania still expensive

Romania does not offer favourable conditions for the investors interested in buying real estate because prices are still high, say BNP Paribas Real Estate representatives, but who, however, see a good opportunity to develop housing priced up to 100,000 euros.

"This year is not a good moment for international investors to buy property in Romania. The market is non-transparent, the investors do not have access to information on the real estate sector, and the difference between the prices requested by the seller and the buyers are willing to pay is still significant", the Deputy Executive Director of BNP Paribas Real Estate, the real estate division of French group BNP Paribas, Henri Faure, told the Mediafax agency.
In his opinion, under these circumstances, the developers that will not adapt to the market by lowering prices will have the most to suffer.

On the other hand, the BNP Paribas Real Estate representative considered that a very good opportunity on the Romanian market this year would be the development of housing priced up to 100,000 euros, to benefit from a payment of 5% VAT.

"The developers must adapt to market needs, to study better its future development. The development of such housing could be a solution to unblock the market," said Faure.
He noted that the most optimistic variant for the real estate market is a change of conditions from the second part of the year, if financing will be unblocked.

BNP Paribas Real Estate is present in Romania through Atisreal company, which acquired the Romanian company Cornerstone International last year. The Bucharest office provides brokerage, consulting and evaluation services on the residential segment, offices and investments.

"This year, we will focus on developing these activities, and, probably, from 2010 we will also bring to the Romanian market other services, namely property management and asset management," Faure mentioned.

The Executive Director of BNP Paribas Real Estate Property Management, Laurie Leclerc, said that, on this segment, the company is interested to buy a Romanian company or to enter into a partnership.

The Group holds three more companies in Romania, respectively Centelem in consumer credit, Cardif - insurance and Arval - leasing.