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Land prices down 25 percent

Land prices have dropped by an average 15-25 percent, according to the data of the EuroMetropola real estate consultancy company cited by the daily Bursa on Friday.

As the consumers have been lately reluctant to buying, the owners pressed to sell and developers short of liquidities thought about the easiest method to unblock the transactions: price cutback.

The plots of land located in central Bucharest (Romanian capital) suffered the least, with this segment reporting insignificant price decrease (5 - 10 percent).

In southern Bucharest the owners are rather confident in the completion of some major projects, such as the airport and the Danube-Bucharest channel, than on the brink of an economic crisis and they refuse to lower the current prices. There are plots of land traded for 2-3 euros a meter located closely to the area on which the airport is to be built, a price most owners refuse to negotiate on, quite the opposite to the situation from the northern part of the capital facing the highest price reduction. The prices of some plots of land located on the Pipera-Tunari road have been halved, especially those put for sale more than six months ago. The price fell from 900 to 400-euros a square meter, EuroMetropola agents said.

The same situation is also to be found in Baneasa (near Bucharest), where prices dropped from 450 to 290-euros a square meter, the same source reported.

Directly correlated with the loan market trend, the land businesses have suffered the most from banks refusing to extend loans. In this respect, the most affected market segments are lots that can be built on (500-2,000 square meters), accessed mainly by the end users interested in buying a house, and the former industrial platforms, bought in the past years from companies specialized in real estate development projects or investment funds.

However, the trend has begun to reverse since H2 of 2008, evolution that can be noticed especially on the outskirts of the city. The decreased number of buyers and removal of many real estate speculators dealing with land transactions have resulted in normalized land market.

In this context, Shimon Gallon, executive manager of GTC Romania, one of the main real estate developers in the country, told the Saptamana Financiara magazine the landowners started to cut back the prices this year, willing to accept prices by some 30-40 percent lower for the same plots of land they were trying to sell last year.

On the other hand, an offer 'inflation' is predicted.

While there were many speculators in the previous years buying plots of land in view of selling them once the infrastructure works, the project design were completed and the land parceled, their number fell dramatically in 2008 due to the credit crisis. Many investors did not manage to resell the land, and are now faced with the incapacity to repay those who had extended loans to them.

The opportunistic investors, who bought assets in the past 12-14 months and wish to sell them in view of obtaining capital for other projects, represent another land source. But they are also dealing with difficulties, as the initial acquisition prices do not correspond to the level of current demand.

 

Sursa: http://www.rompress.ro

Tags: plots price percent prices

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