Yitzhak Hagag, co-founder and shareholder at Hagag Development Europe, spoke to Business Review about the company’s development pipeline in Bucharest and its expansion plans in other cities. In terms of property trends, he expects refurbishment and mixed use projects to gain ground as people and companies are looking for an integrated approach to shopping, working, and living.
By Ovidiu Posirca
What are Hagag Development Europe’s top business objectives in Romania for 2022?
For this second half of the year, our attention is primarily oriented towards the design and development of our new projects, as well as on the further expansion of our asset portfolio. And as we continue to scale Hagag Development Europe’s knowledge and capabilities, we are delighted to say that we had very satisfactory results in H1 2022, in terms of both sales and occupancy rates. Moreover, our recent acquisitions—the land plot at 1 Primaverii Boulevard and the office building at 5-7 Vasile Lascar Street—are also quite prestigious undertakings that come to consolidate our long-term business strategy. Looking at what’s happening not only nationwide, but worldwide, we can see that real estate developments are getting larger and increasingly moving towards mixed-use models, with projects varying from greenfield and revitalisations of aging districts to high-value developments in prime urban locations. We believe the timing to be highly convenient for real estate investments as a whole. This is exactly the reason why we are continuously prospecting the European market in search of new opportunities, both in Romania and elsewhere. We are currently in advanced discussions for purchasing several properties located in the central areas of Bucharest and other large cities in the country.
What are your development plans for the building you purchased in Q1 2022 on Vasile Lascar Street in Bucharest?
We are very enthusiastic about the future of our property on Vasile Lascar Street. However, we are talking about a long-term development timeline, and given the fact that the building is partially occupied, we are considering a two-phase upgrade. We will carry out some technical improvements on the floors and areas that require urgent intervention and later allocate a more substantial investment for the full refurbishment of the edifice. As we see it, office and residential developments within the city centre have a tremendous impact in shaping cities, communities, and individuals alike. Living and working downtown comes with a significant financial value associated with the urban ecosystem’s welfare, playing a critical role in creating positive social outcomes for society. Many of the general functions that support human well-being are housed within real estate projects, be they private or public, concentrated in the city centre: housing, schools, hospitals, community centres, office spaces, grocery stores, hotels, restaurants, and so on. This is why we are not willing to compromise, and why we are taking the necessary time to revive this heritage building that will bring so much added value to the area. Our intention is to preserve the building’s current destination, but with a twist: office space for lease plus a dedicated co-working area developed on the top floors.
How is the development process going at H Pipera Lake? How many apartments have you completed/sold, and what is the delivery strategy?
As scheduled. We are happy to have completed—and sold out—all five buildings in phase I (435 units). The first three buildings were delivered in early Q2 last year and we are currently undergoing procedures to start delivering the apartments in buildings 4 and 5. The project is really starting to take shape, turning into what we have envisioned it to be: a multicultural, young community that paves the path to creating a new, vibrant neighbourhood in north Bucharest: Aviatiei-Pipera. We already have two access ways connecting the complex to the main boulevard, 460 underground and above-ground parking spaces for residents and visitors, on-site property and facility managers, and this month we also inaugurated the first playground by the lake shore and launched the 24/7 concierge service available to all residents of the compound. Furthermore, this spring we opened the pre-sale stage for phase II—which will deliver 5 buildings with a total of 410 residential units—where nearly 200 units have already been reserved.
When will you kick off the development of H Primaverii 1 and how much will you invest in the project? When do you aim to complete the constru-ction works?
We are currently in the design phase and we will be able to provide more details on the development timeline in the coming months. According to our preliminary calculations, the budget we will need to allocate exceeds EUR 20 million, and we expect construction works to unfold over a period between two and two a half years after breaking ground. We have been receiving daily inquiries ever since we announced the project in May, which for us is a confirmation that the upper-premium residential market is not only heading in the right direction, but also becoming more mature, every year.
What is the development status on H Stirbei Palace? What kind of functions will you integrate into this building?
We are fully prepared to start construction works on the Palace.
Unfortunately, not much has changed over the past couple of years as we are still waiting for the building permit to be issued. As far as we are concerned, we have completed the necessary steps and provided all the necessary clarifications to the authorities, as requested, but somehow the process continues to stagnate. Nonetheless, we are optimistic about the future and looking forward to starting the works.
In terms of the project’s purpose and functions, our concept involves transforming the Palace into a high-end commercial gallery for premium international brands, and also adding a cultural component: a 1,000 sqm art gallery that will exhibit contemporary talents. We are receiving frequent inquiries from potential tenants and we are currently in discussions with several fashion brands that are interested in leasing with us. All in all, the prospects are looking very good and we are positive that, when completed, H Stirbei Palace will once again become one of the city’s most interesting landmarks. Besides the benefits it will bring to the municipality and residents, this project will definitely attract a huge number of tourists as well.
Are you looking to purchase new buildings in Bucharest or make acquisitions in other cities?
Both. In Bucharest, for example, our attention is directed towards the central and northern areas.
As for investments outside the capital city, we are closely looking at—but not limiting ourselves to—areas like Constanta and Brasov, primarily considering their existing emblematic properties or exceptionally positioned plots of land that match our investment policy.