Realty 2015: New apartment deliveries to surpass 2014 levels by yearned

Newsroom 19/06/2015 | 16:30

After posting the first signs of growth in 2014, the local residential market is expected to achieve a stable development through to yearend. One welcome change, however, is that the market is becoming increasingly mature, raising hopes of a sustainable growth cycle ahead, argued panelists during BR’s 14th Realty event.

Simona Bazavan

“Buyers are more educated and ask more questions than they did in 2008, for example. They pay great attention to the neighborhood’s development potential because they see the acquisition as a long-term investment and they often bring along consultants to advise them on the quality of the construction. This didn’t happen very often before, said Viorel Mohorea, project manager, new homes division, at Coldwell Banker.

Imobiliare.ro visitors are also more demanding in terms of the information provided by the real estate platform, said Adrian Erimescu, co-founder and CEO of Imobiliare.ro. “They are paying more attention to the available information – information about the neighborhood, access to public infrastructure, schools and so on. This is a clear change from a few years back when they needed far less information. Now they are very focused on the quality of the information requested. Their research also takes longer,” he added.

Another aspect is that buyers are no longer willing to make off-plan acquisitions except from well-established local developers, according to Andreea Comsa, managing director of Premier Estate Management.

All in all, most transactions today are closed by the intended owners, whereas back in 2008 many of the acquisitions were made by large, speculative investors who were looking to make a profit in six to eight months, added Mohorea. This doesn’t mean however, that investment buyers are no longer present on the market.

“There continue to be investors interested in apartment acquisitions given that property yields surpass interest rates on bank deposits. So there are still investors looking to buy apartments – probably not as many as in 2008 but they are nevertheless active. Also, because prices have stabilized, many buyers that have the necessary funds to make an acquisition, but have postponed it for years waiting for prices to go down even further, have started to buy,” said Comsa.

And developers need to adapt to buyers’ needs and preferences – present as well as future ones. “We need to be able to anticipate. Given that we are building a product today that will be available on the market in one, two years, we need to able to anticipate how demand will look by then,” said Laszlo Csiki, CEO of Adama Group, a member of Immofinanz Group. The company is currently developing a EUR 3 million project in the Berceni neighborhood in Bucharest.

As for buyers’ financing options, the government-backed Prima Casa continues to be the market’s main driver. “Prima Casa remains the leading financial option for Adama’s clients; however, low interest rates mean that they are also opting for regular mortgage loans,” added Csiki.

One positive development is the fact that more developers are offering their own financing programs. “This means that they have easier access to financing themselves,” pointed out Erimescu.

Indeed, industry representatives believe that banks are more open to financing not only end buyers, but also developers. Although Adama is financing the EUR 3 million investment in the Berceni project from its owns funds, it says it has been approached by several small banks offering financing options.

And who else is building? “On one hand there are those developers that have been active since before the crisis. New entrants are generally small local players, many of whom have already completed and sold successful projects and who are building larger projects. Some of them have been present so far only in southern Bucharest and are now upgrading to better areas of the city. So what we’re seeing is that there are few foreign newcomers while local ones are increasingly active,” said Erimescu.

Some office developers are now expanding their business into residential, added Comsa.

Overall, participants in the event predicted that 2015 will see a growing number of new homes delivered in Bucharest and its surrounding areas – approximately 10,000, according to Mohorea.

As for how the market will look at the end of 2015, most of the panelists forecast a stable evolution through to year end, with the possibility of small price increases for new apartments. Sales targets are on the rise given results from the first five months of this year.

For example, sales in the Cosmopolis residential project in Bucharest have been on an upward trend for the past three years; however, this year growth stood at around 30 percent. “While last year we sold on average some 27 units each month, this year we’ve sold on average 40 units per month. The developer will also deliver some 400 new apartments which it wants to sell by yearend,” said Mohorea whose agency is the developer’s exclusive representative.

And the word of the day remains stability. “We hope to see a normal growth cycle that will last for more years. What we don’t want is another boom period that after two years will be followed by another crisis,” concluded Csiki.

Read more in the next BR issue

BR Magazine | Latest Issue

Download PDF: Business Review Magazine March (II) 2024 Issue

The March (II) 2024 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “BAT DBS Romania Hub: A Vibrant New Office For An Employee-Centric
Newsroom | 27/03/2024 | 17:32
Advertisement Advertisement
Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue