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Gran Via: Cash is king in times of crisis

Spainish Gran Via real estate developer officials, holding land plots to have around 5,000 apartments built in the Drumul Taberei district of Bucharest, say the only reason why they have yet to start construction works for any of the three projects is that the process of getting construction permits has been extended because of the elections in Bucharest this year, the Ziarul financiar reports on Wednesday.

The Company owns the land of the former plants such as Tricodava, Electrotehnica and Frigocom in western Bucharest, for which it paid almost 100 million euros of its own funds in 2006 and 2007. '(...) We'll start building works for the first project next spring,' Gran Via Romania general manager David Martinez Vallbona told the newspaper.

As a result of the financial crisis, which drove down sales of homes and banking loans for real estate investments, a series of investors have put projects on hold until market conditions improve. Nevertheless, Vallbona is upbeat about his projects.

'We have no loans so far and we are very careful about loans. What I believe was abnormal happened two or three years ago, in terms of the skyrocketing prices. I believe that in fact things are now getting back to normal,' Vallbona stressed adding he does not target a profit higher than 20 percent for the projects in Bucharest.

Vallbona is aware the market is going through a difficult times, both due to the financial crisis and NBR's new lending rules and the high level of VAT for homes, but says one of the three projects of Bucharest may be started on the Company's funds.

'Cash is king. We still have cash. This doesn't mean we'll develop entirely on our money, so that we plan to reach a ratio of 25-75 between our own funds and banking loans,' Vallbona told the Ziarul financilar.

Gran Via this summer started construction works on the first project in Romania, in Constanta, where it will build 1,000 apartments in Flamenco project. 'We've invested 10 million euros of our own funds in this project, so far, and we have two offers, from BCR and La Caixa, for a 30 million-euro loan, enough to finish the first stage of the project including 400 apartments. We've sold around 10 percent of the homes in this stage and we expect sales to attain 15-20 percent. Still, next year we plan to raise prices as we have a profitability of below 10 percent for the first block,' the Ziarul financiar concluded quoting Vallbona as saying.

 

Sursa: http://www.rompress.ro

Tags: vallbona crisis project projects bucharest euro bcr