Cluj awaits EUR 700 million of investments

One of the largest cities in the western part of Romania, Cluj- Napoca has witnessed an increase of interest in real estate development both from developers and from institutional investors in the past few years. The city is likely to attract more than EUR 700 million in real estate investments for the long term if all the projects announced so far are completed.
Moreover, Cluj-Napoca has managed to attract several top real estate developers and investors. The city will host the first investment underway by TriGranit Holding in Romania – Polus Center. The commercial center in this western city also formed part of the biggest transaction so far on the Romanian market: it was purchased late last year by Austrian fund Immoeast for some EUR 210 million. This is also the fund's biggest single investment in Romania.

Two malls underway, but none open yet
Polus Center, built on a 34-hectare plot just outside the central business district on the main highway leading to Oradea, should bring some 100,000 sqm of built area, of which 62,000 sqm will be retail area. Carrefour will anchor the new mall with 15,000 sqm already secured. Another 12,000 sqm has been reserved by other tenants, according to TriGranit data. Construction work on the mall started mid-2006 and according to the developer's estimate should be finished by year-end.
A second mall on which construction works started last year is Iulius Mall, a EUR 48 million development by Iulius Group, which operates similar centers in Iasi and Timisoara. The commercial center will be accompanied by an adjacent 8,000-sqm class A office building on five floors.
Other developers are likely to target Cluj for their mall-type centers, as only the two above mentioned malls have been announced for the city and neither is ready yet.

Office developments are taking off
The mentioned office building will join several existing ones such as Maestro Business Center, with some 10,000 sqm, and City Business Center, which has 5,000 sqm of built area.
Another office building, Cluj City Center, will be delivered by September this year following a EUR 10 million investment by Eurotrend. It will feature some 13,000 sqm of built area on 11 floors.
Class B offices in Cluj are better represented with some 50,000 sqm delivered in 2005. Last year brought along mainly Class A office facilities totaling some 20,000 sqm. Office rents in Cluj-Napoca are between EUR 8 and 10 per sqm per month for class B offices, while in more modern buildings it varies between EUR 12 and 15, according to data from real estate agency Edil.

New residences make up half of transactions
The residential market in Cluj-Napoca has taken off in recent years with 2005 dedicated to new luxury projects and last year to projects targeting more of the middle class. Transactions with residences accounted for around 50 percent of the total real estate transactions in Cluj-Napoca, according to a report from Edil. Prices have gone up along with the interest in new residential units from around EUR 800 per built sqm in 2005 to between EUR 1,000 and 1,500, depending upon location. The new projects have triggered a slight increase in price for old apartments, according to Edil specialists.
The southern area of the city is preferred by companies developing new residential compounds and increases in price were seen in areas such as Gheorghieni, Andrei Muresanu, Zorilor and Plopilor.

Thousands of homes underway
The biggest residential project to be developed in Cluj is by local developer and contractor Impact, which has won the tender for a public-private partnership with the Cluj-Napoca city hall for blocks on Dealul Lomb. The 204-hectare plot will host blocks featuring a total of 5,000 new apartments. The overall investment in the project is likely to reach some EUR 400 million. The first homes will be delivered in two years.
A mixed EUR 30 million project is likely to replace the Feleacul sweets factory in the city, according to company representatives. The factory will be relocated outside the city and leave room for a 39,000-sqm residential project, offices on some 9,000 sqm and commercial space of 12,000 sqm.
The real estate project, totaling some 72,000 sqm and located in Marasti neighborhood, is scheduled for delivery towards the end of 2008.
Cluj-based group Imofinance is planning residential and office projects in the city. The company is working on 132 apartments in a ten-floor block in the city and on other projects in the area.

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Land deals no longer speculative
Land was still a main option for those willing to invest in Cluj-Napoca. “Land prices have accounted for the biggest increase compared to other segments of the real estate market,” reads a report from Edil. Transactions with land in Cluj were not, however, speculative, and most of them were made in view of development. Around 70 percent of those who invested in plots were individuals who have built blocks and villas, while the rest was represented by large real estate developers and other companies.
A square meter of land close to Mihai Viteazu and Unirii squares was for sale at some EUR 1,000, according to Edil data, while in Andrei Muresanu, Gheorghieni and Grigorescu the price varied between EUR 200 and 450 per sqm.

Corina Saceanu