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tIMOn opens doors to real estate investors

Real estate fair tIMOn offers almost 8,000 homes to prospective buyers, at an edition dedicated especially to those who wish to place the profit made during the year that is about to end. Interview with Vlad Vlasceanu, Admedia Consulta Managing Director.

What have you prepared for this new edition of tIMOn?

This is a season holiday edition, the second after last year's dedicated to special offers and most certainly an exhibition where developers will bring their most competitive prices. Thanks to the announced credit relaxation next year, the market may redress and prices may be bigger. With the special offers made now, people who can afford a loan or those who can buy with the money down should really not wait for the new year because properties will be 20 - 25 per cent more expensive by then.

Everybody speaks about the crisis, especially in the property field. How will you be affected?

As exhibition organisers, we do not fear the crisis. In fact, what we call a crisis is a national psychosis. The crisis is enhanced by the fact that no one sells and no one buys at the moment. This psychotic condition is aggravated by the fact that sales have stopped altogether in all other industries as well, people are not buying anything so goods are no longer being manufactured. Coming back to real estate, one sure thing is that developments due to be delivered in the autumn have been ceased, all developers are now trying to finish whatever project they have in progress. By the spring, we will only have about 10,000 new homes in Bucharest. But the demand is ten times bigger than the supply. People prefer to wait, but they are in for a big surprise next year. They will start buying, the stocks will be depleted and we'll be back to where we were three years ago when everybody needed a property and was prepared to pay anything. Developers have made their calculations, cut certain expenses, and will recover their losses afterwards.

What is in demand these days? What do prospective buyers prefer?

Everything from studios to villas is in demand. The worst affected by the new credit rules are generally people looking to buy a studio or a one bedroom flat. Thos who hunt for a medium to high-end units of over 150 sq m, two bedroom flats or villas are also waiting as the rumour goes that property prices will drop.

Who loses and who gains now as prices are indeed smaller?

Prices have dropped, but not significantly. In fact, they have not got bigger than the prices in the beginning of the year because a new unit undergoes there or four price rises every year, each by 15 per cent. Not only have prices not gone up this year, but there have also been reduction by up to 10 per cent despite of growing building material prices. No one seems to realise that we might have reached the bottom line. These who are in danger right now are the very small developers who bought land just because that was the trendy thing to do, who did not make consistent financial projections and who will now have to sell unfortunately not to people who need a home, but to investors with cash on their hands who will start buying at very good prices.

Are we going to see an artificial inflation of prices?

No, there will be no artificial inflation of prices. I'll give you an example: a developer who has 300 units in stock needs to repay bank loans so he will have to sell even at a price below the cost of construction. An investor comes, buys the unit and takes it to the right price - about EUR 1,000 / sq m, because he can afford keeping the investment for another year. He uses the liquidity he may have now to yield a double return.

The old flat is not like wine, whose value grows with age

When is the old flats market going to collapse?

At this moment there are exactly one year and four months since I said that the old flats market will collapse to half. Thus, the real estate market would be also unblocked. Now, the new dwellings have reached about the same price as the old flats. And, normally, those who have old flats cannot sell them any more. If an old flat were sold at its real value of EUR 50,000, it would have a buyer at its door, because that is its real value. In 1995, an old flat with two rooms cost USD 10,000, and now it costs EUR 100,000. The old flat is not like wine, whose value grows with age. The value of any construction falls with the passing of time. When the market of the old flats regulates itself, things will be clearer. Those who will sell an old flat, to which they add a small credit, will have the possibility to buy a new flat. Exactly what happens in the European Union with the life cycle of a new dwelling. In Romania the life cycle of a dwelling is 50 years, in EU it is 10. If the holder of an old dwelling cannot sell his dwelling, the latter will reach its real price, because the owner will cut every month the price by EUR 10,000. There are Romanian mentality problems when we say "If other people got so much half a year ago when they sold it, why shouldn't I get the same?" And there is also a problem with those who acquired overpriced real estates.

Which is the profile of the tIMOn visitor?

The profile of the tIMOn visitor is divided into several segments: first, there is the luxury real estate visitor who looks for eccentric offers. About five per cent are in search of such offers. Another type of visitor is that who is interested in a real estate investment, about 10-15 per cent, 10 per cent of people from industry who make predictions and calibrate their future affairs. The biggest segment, 20-25 per cent, are middle class buyers who look for one room, two rooms, or three rooms flats at decent prices. The remaining are those who buy villas or look for luxury flats.

What should we expect from a special offer?

The special offers are negotiated with the developers, there are other discussions which focus on price, advance payment, contracts. The offers start from discounts of 5-10 per cent, they can have equipped kitchens, or fully furnished flats, free parking lots, and significant reductions of prices of up to 20 per cent. The most expensive dwelling reached EUR 800-900.

There are dwellings in all the areas of Bucharest, but also in Tenerife, Spain. A paradox happened there. There were four million dwellings last year which did not have any buyer. They are much cheaper, but we must see who wants to buy there. There are people who want a holiday house, which is why we had offers of flats in Bulgaria.

The market from Romania continues to have a very big potential, but the potential is exploited only by those who are aware of it. The ordinary Romanian does not benefit from them.

Based on your past experience, how many contracts will be signed at this edition of tIMOn?

Last year there was the first December edition, this is the 12th tIMOn edition, and last year the sales were very big because it was still possible to sign contracts with deductible VAT, with the reimbursement of the tax, the crisis did not exist and there were many companies which had a profit for reinvestment, and they reinvested it in real estate. For, those who have certain accumulations, and want to make an investment, this is the time to make it. We do not intend to offer a dwelling for everybody, as we do at the editions of spring or autumn, this is a fair for investments, for those who have an annual profit that they want to reinvest. And the developers want to capitalize their assets for the next year.

tIMOn takes place at World Trade Center during 4-7 December.

 

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