Yitzhak Hagag, co-founder of Hagag Development Europe: A Business Based on the Philosophy of Perfection

Since its entry on the local market, back in 2017, real estate investor and developer Hagag Development Europe has been working to reshape the local urban landscape. Within less than five years, the company has become one of the most prominent real estate players in Romania and the SEE region, by staying true to its three main principles: design, culture, and service. The company’s business vision is based on the philosophy of perfection, and it pays little attention to passing trends. Hagag Development Europe’s strategy is built around timeless properties that transcend trends and create excellent value that doesn’t sway away. Yitzhak Hagag, co-founder of Hagag Development Europe, sat down with Business Review and talked about the company’s approach on the local market and its plans for the future, both in Romania and abroad.

By Anda Sebesi

What is the story of Hagag Development Europe and how has the company developed since its entry on the Romanian market back in 2017?

Hagag Development Europe is an experienced real estate investor-developer, operating in Europe and being publicly traded on the Tel-Aviv Stock Exchange (TASE). Our group of companies is involved in the purchase, development, renovation, and management of several assets located in both privileged and emerging locations across Bucharest and other major cities in Romania. Since 2017, when we opened our local office, we have been tirelessly working on reshaping the urban landscape. Our land and property portfolio has been growing every year, and we are currently managing over 250,000 square metres GBA of residential, office, commercial and, more recently, hospitality projects. I am delighted to say that within less than five years, our company has managed to become one of the most prominent real estate players in Romania and the SEE region, and that it is directly responsible for the development of some of Bucharest’s most elevated residences and office buildings.

What are the company’s biggest achievements in Romania?

First of all, Romania is an emerging market, and as all other emerging markets, it is highly prone to risk. And yes, Bucharest has enormous potential, secondary markets are on the rise, and the real estate sector as a whole has become more mature; still, the tense social-economic-political climate, the covid-19 pandemic, and the recent Russian-Ukrainian conflict have been pushing everybody’s limits. In this context, I believe that being here for five years now, with a firm intention to stay and ambitious plans for the future, having delivered unique projects such as H Victoriei 109 and H Victoriei 139, finalising construction works on H Tudor Arghezi 21, and continuing our investments in key areas, exploring, shaping, growing the niche segment of urban renewal through the reconversion of old buildings with patrimonial value, and introducing to the market upper-premium projects such are H Eliade 9 and H Primaverii 1 are all among our top achievements. I also think it is relevant to mention that over the past six months alone, as a result of our latest acquisitions, the market value of our portfolio, as completed, has gone up by more than 50 percent, from EUR 200 million to over EUR 300 million. Likewise, this August we will be celebrating our first year as a publicly traded company on the Tel Aviv Stock Exchange.

What can you tell us about your company’s positioning on the Romanian real estate market through the projects it develops and how is Hagag Development Europe different from other real estate developers?

Modesty aside, what we are doing is truly unique. Our iconic projects have raised the benchmarks and they continue to set the standards in terms of premium real estate development and luxury living as our portfolio expands in Bucharest and secondary markets across the nation. Our vision for the local market and our investment strategy are the main differentiators. Moreover, regardless of the purpose of each of our projects, we pay close attention to three core criteria: design, culture, and service. I am talking about a holistic approach designed to offer an exclusive experience to residents and tenants alike—whether it’s for living or working, in a refurbished building or a new development, downtown or in north Bucharest. When you walk into an H property, you should feel like you’ve walked into a 7* hotel. That’s because we are inspired by imagining how people are going to respond to—and interact with—what we are building, and how our projects are going to create memorable moments and special communities. Even at H Pipera Lake, our large-scale affordable luxury development, we are working on integrating several elements such as concierge services or property and facility management, which are usually only available for premium projects.

How would you describe Hagag Development Europe’s vision and how does it get translated into the projects the company develops in Romania?

Our vision is based on the philosophy of perfection. Perfection is what elevates and distinguishes each of our developments, as do the sites and locations we choose. We don’t care much about trends; they’re just not part of our vision and who we are as a company. We tend to focus on timeless properties that transcend trends and create excellent value that doesn’t sway away. Trends come and go; our properties and the business we are building are here to stay. As we see it, real estate is not a short-term game. At least not the real estate that we invest in. We have a very well-articulated strategy and we only buy prime assets in key locations. And what I really like about what we are doing is the fact that we have the opportunity to purchase super prime real estate, add our personal touch, and make it great. We strongly believe that true luxury is a matter of choice, and our unique value proposition offers clients something beyond tangible things. This includes the views, the building’s personality, the historical influence, the unrivalled amenities, and so on. Most of the time, especially in Romania, “luxury” gets mistaken for “expensive,” but it is actually about the experience. It’s not about adding more marble or bronze or more square feet or the best fixtures. Sure, all of that matters and definitely helps. But what “luxury” means is being cared for and taken care of—being able to clear your head, to be inspired, to inspire others, and to be your best self. This is what we want to express throughout our projects.

What is the reason behind your decision to invest in the central areas of Bucharest?

Coming back to what I was previously saying, our decision of directing a significant part of our investments towards central areas is linked to our long-term vision for Romania and to the uniqueness of our brand. The city centre has been neglected by investors and developers for almost two decades, and it would be a pity not to explore its beauty and potential. The properties we own in downtown Bucharest are some of the most beautiful buildings in the city. Palatul Stirbei, for example, was revolutionary when it was built in 1835, and it’s as revolutionary now, in 2022—even though it’s on the verge of collapse nowadays. What’s more, iconic properties in prime locations do not devalue over time. No matter the market fluctuations, there will always be strong demand for high quality and unique architecture. In good market conditions, you get a good return of investment for such products. On the other hand, if the market is temporarily shaking, you have great downside protection.

What are the most recent business updates for your operations in Romania?

We started 2022 on the same positive note in which we ended 2021, and lately we have been very busy ”shopping,” consolidating our presence in the region, and expanding our local team. In Q1, for example, we completed two new transactions: we purchased an old office maze on 5-7 Vasile Lascar Street, and a plot of land of over 1,300 sqm located at 1 Primaverii boulevard. Also in terms of business updates, we have recently launched our second upper-premium residential boutique, H Primaverii 1, which—judging by the number of inquiries we have received from both clients and media since the news about us purchasing the land got out — I actually believe was the most highly anticipated announcement on the residential market so far.

In terms of leasing and sales, we are also pleased to post outstanding results for the first half of the year. Our office building H Victoriei 109 is fully leased, the residential boutique H Victoriei 139 is sold out, phase I of H Pipera Lake (435 units) is also sold out and completed, and we have recently started pre-sales for phase II, where almost 200 units were reserved in just two months of project marketing. H Eliade 9 remains, too, a prestigious undertaking for us. Almost half of the units available for sale have been contracted.

What are Hagag Development Europe’s plans for the local market?

To sum up what could be a very long phrase, I believe the proper word to use in this case is “expansion.” We are simultaneously working on planning, designing, launching, and marketing new projects, all while looking into several other properties and plots of land that have caught our interest. Aside from Romania, we are also looking into opportunities abroad, in more than one European metropolises. And yes, in the long run, our intention is to expand across both Romania and other countries in Europe.

How do you think the Romanian real estate sector will evolve in the coming years?

We are very optimistic about the future of this market. Romania has shown a lot of resilience throughout the pandemic, and even now in the unfortunate context of the Ukraine invasion. Over the past couple of years, the market has performed much better than expected, especially when it came to the residential sector. The office segment has started moving again and, with the recent entries of new international players, retail is also slowly making a recovery. As far as we are concerned, Hagag Development Europe remains open to all opportunities. The current market environment is not deterring us from buying real estate. We have the experience, the know-how, and the financial capacity to look past the temporary fluctuations of the market and comprehend the bigger picture, as depicted in a time projection of 10 to 30 years.

What do you expect the residential segment in Romania to look like ten years from now?

Let’s just say that if the past few years have taught us anything, it was that time is the biggest luxury one can have. I personally believe that luxury living is shifting towards this narrative and that buyers will continue to look for easily accessible homes that cater to this lifestyle. Even now, buyers are looking for homes that complement their lifestyle. And if you think that hotel brands are the best at doing that, think again, because as a developer and manager of real estate assets, Hagag Development Europe has already started to move in this direction. H Victoriei 139, H Eliade 9, and H Primaverii 1 are all about iconic locations that are remarkably connected to the core of the city, premium services, fine amenities, and unique experiences. We can call it upscale living if you like.

Moreover, the fact that Romania has the oldest stock of residential units in Europe further underlines the country’s growth potential. But the real problem here is urbanisation, and I think that the natural outcome in this context is for the residential segment to continue to develop. Even when it comes to mass-market projects, clients are becoming increasingly demanding. They have higher expectations and their preferences and behaviours are and will be reflected in what the offer will look like 10 years from now. As an innovative player, when we designed our mass-market project H Pipera Lake, we took into consideration the long-term evolution of this particular segment, so we are already working on a product that will meet the future clients’ needs.

More than once over the years, both publicly and unofficially, Hagag Development Europe has promoted art and culture and supported local artists. How do you see the intersection of art and real estate?

In our view, real estate development is by default a form of art. When building for the future, we are creating something aesthetically beautiful that adds value to the city’s skyline while reviving the urban landscape as a whole. Our buildings on Calea Victoriei are great examples. And since we own these superb properties in such iconic locations that make them great places to bring art to the public, we are very proud that the ground floor of our office building H Victoriei 109 hosts a space dedicated to contemporary art, The H Gallery, an eclectic space that’s perfectly framed inside the natural contrast between the building’s impressive architecture and the vibe of the emblematic Calea Victoriei. Our newest tenant is truly unique, as the main purpose of the gallery is to develop a less explored direction of the Romanian art scene, through collaborations with local and international galleries. Thus, the H Gallery will act as an intermediary in organising exhibitions and events. Its aim is to both shape the way the public interacts with contemporary art and familiarise people with the various methods by which art is created, interpreted, and collected in a recent context. Accommodating a tenant like The H Gallery and supporting its growth and development is just the beginning of our endeavour to create that perfect synergy between art and real estate. Just think about it: isn’t it fabulous to admire art while enjoying a glass of champagne in a magical setting?

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