HB Reavis has lost its appetite for investments in Romania. But this only translates into a less aggressive approach – the same budget for investments remains as was initially scheduled: up to EUR 250 million. Currently, HB Reavis is waiting a decision on a bid the company has participated in, which, if won, could result in a EUR 500 million mixed project in Bucharest.
“We are discussing four big projects, but high land prices in Romania have led us to downgrade the country a little bit in our plans. Our appetite for the country has lessened, because there is a disproportion between the price of land and what can be achieved in the country,” Hlavacka told BR. “There are land tenders, whether organized by individuals or by state bodies, like for example the recent CFR land sale. We are no longer so keen on such projects, but we still have the money ready for good acquisitions.”
He added that the firm was looking only at retail and office. The mixed project portion would make up a very small part of residential, less than five percent.
“We are bidding for one project where we lowered our bid for a piece of land by 30 percent from January to March. It is a project located in the center of Bucharest, a mixed-use project of 300,000 sqm plus,” the CEO adds. “The end-value of the mixed project we plan there is around EUR 500 million, and it would take seven to eight years to complete.” The company is already present in Romania through IPEC, a company which is working on two logistics projects in Romania. IPEC was acquired last year, allowing HB Reavis to operate directly in Romania. “We have been offered projects in Romania. We chose the country because of the size and the rapidly-growing market, and Romania is one of our focus countries. Everybody is waiting to see how the first big investments work out, and unfortunately I think Romania has lost its momentum,” the HB Reavis CEO says.
“We receive projects every week – land offers. We have not yet received projects from distressed developers, but this will come by the end of this year. It has already happened in other countries in CEE, like Poland and Hungary, where developers cannot finish these projects. Such sales will definitely be opportunities,” Hlavacka says. Romania being a hot spot has pushed land prices too high. It is likely that such distress sales will push land prices a little lower, he concluded.
By Corina Saceanu