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.

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Source: http://www.standard.ro/articol_65526/becali_expects_land_prices_to_double_in_five_years.html

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.

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Source: http://www.zf.ro/zf-english/gtc-funding-for-our-ongoing-projects-is-ensured-3381923/

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.

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Source: http://www.zf.ro/zf-english/standard-poor-s-has-downgraded-romania-s-rating-to-bb-with-negative-outlook-3381942/

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.

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Source: http://www.zf.ro/zf-english/immoeast-s-capitalisation-drops-to-800-million-euros-fund-plans-property-sale-3305708/

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 AnunturiParticulari.ro, 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 AnunturiParticulari.ro, 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 AnunturiParticulari.ro. According to the monitoring report conducted by AnunturiParticulari.ro, 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.

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Source: http://www.curierulnational.ro/In%20brief/2008-10-07/Prices+of+one-room+and+two-room+apartments+dropped+by+over+10%25

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.

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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

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%.

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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