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Projects by real estate investors, delayed or cancelled

The Romanian residential market was blocked once rumours spread announcing a real estate crisis worldwide, leading to the cancellation or delay of transactions.

The uncertainty registered in the residential section of the real estate market diminished customers’ buying availability for apartments and thus forced companies working on this field, as well as specialized or accidental investors to change their strategies. Therefore, several investors withdrew, cancelled or delayed their projects, Business Standard reveals.

During the last six months, prices decreased with almost 10 pc for old flats and remained unchanged for new flats, under the circumstances that they had achieved spectacular growths of 30 pc yearly, during the last years. Considering the new facts, developers such as Sonae Sierra, one of the greatest companies on the Portuguese market, as well as Energoconstructia, one of Romania’s greatest construction companies, canceled real estate projects at a local level. “We decided to drop the project we initially intended to initiate on the lot we purchased in the Berceni neighbourhood, because the real estate market is quite unclear at the time being, and oscillations on this market are massive. We are already negotiating with an investor in order to sell the approximately seven-hectare lot we purchased in the Progresul area. We requested EUR 500 per square metre, no VAT included,” Constantin Tabacaru, the Technical Manager of the Company declared for Business Standard.

Under these circumstances, the transaction might bring the company EUR 35 million. In June, the Portuguese developer Sonae Sierra and the Irish investor Caelum Development decided, after negotiations with the local authorities, to drop the building of a block present in the initial project of Park Lake Plaza, projected as one of Bucharest’s greatest malls, as they considered that it is more justified to cut expenses under the present circumstances of the market, even if this decision also reduces income. The companies decided to replace the residential project with a sports’ centre.

Moreover, last week, the representatives of the real estate advising company CB Richard Ellis Eurisko launched a warning that the present blockage of the residential market might lead to the withdrawal of several real estate developers from the European market. Ilinca Paun, the manager of the Residential Department of Colliers International, declared that BNR imposed a forced maturation of the real estate market in order to keep inflation under control.

The residential market in Romania has entered a difficult period once the rumours had announced a real estate crisis worldwide. These rumours lead to a state of expectance and of blocked transactions. During the first half of the year, the number of transactions with new apartments was reduced to half, compared to the similar period of the last year. As for the old apartments’ section, the market was overwhelmed with supply due to an impulse by owners who intended to catch the moment of the highest prices.

This excess in the supply resulted in a slight decrease of prices. Luxury apartments seem to be the only section of the real estate market that remained quite unaffected by the present issues although the real estate agencies that place them on the market have reduced their monthly selling target to half since the second trimester of the year, according to some of the major real estate advising companies on the local market.

Sursa: http://www.nineoclock.ro

Tags: market estate rsquo companies residential projects investors bnr

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