Home buyers offer 30% less than asking price from the outset

In the first week of the year, the few people who have voiced interest in acquiring apartments in Bucharest, have in a first stage offered 30-50% less than prices requested by the owners, given the almost entire lack of real estate transactions due to problems on the lending market, as well as to the rapid depreciation of the RON, according to real estate agents. "There are people interested in homes, but they are still hoping prices will go further down, with some of them additionally being scared by the rise in the euro. We had a three-room apartment in the Aviatiei area, for which the owners were asking 150,000 euros, and a client's first offer was 100,000 euros. Still, I haven't heard of transactions being concluded in the first week of the year," said Elena Usainchisa, broker with Nick Intermed agency, which posted turnover worth 285,000 euros in 2007. "From a buyer's position, under the current market conditions, I offer a 50% lower price for any acquisition. There are many owners faced with a liquidity crisis, who are forced to enter talks. They, in turn, have one price for those who only ask and another for those interested in buying," says Gabriel Dragomir, partner with DPA Estate and former senior broker with Indoors Real Estate.

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Source: http://www.zf.ro/zf-english/home-buyers-offer-30-less-than-asking-price-from-the-outset-3736775/

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.

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Source: http://www.zf.ro/zf-english/colliers-cancels-contracts-for-five-projects-3588168/

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 www.anuntul.ro 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.

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Source: http://www.zf.ro/zf-english/prices-of-old-apartments-in-bucharest-continue-to-fall-3447319/

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".

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Source: http://www.curierulnational.ro/In%20brief/2008-10-31/10%25+price-cut+from+owners+after+negotiations

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/