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Credit loosening, the right measure to unlock the residential industry?

Although the National Bank of Romania (BNR) decided last week to relax the credit standards, real estate advisors say this was a necessary measure, yet not sufficient to steady residential market. In this segment, things will continue to move slowly, while the consumer confidence will be harder to regain.

"Relaxation of the mortgage loan rules will surely reinvigorate the residential market, but both buyers and lenders will focus more on the quality of products and reliability of the developers.

The sales' squeeze in October 2008 has dramatically dented the poorly planned and marketed projects", Eduard Uzunov, chairman of Regatta told Wall-Street. He added that only large developers with marketable projects would be able to sustain a competitive advantage in the coming period.

Three months ago, Uzunov said the lenders would need to adapt to market conditions so that persons who need a housing unit to be creditworthy, as the population medium wage is increasing and is directly influencing the demand for real estate products.

Calin Bucur, consultant at Residential Department at Colliers International and the head of the team that set up BREI indice (Bucharest Real Estate Index), said BNR's decision was an important step in the path to unlocking the residential market, yet not enough if we were to consider the gloomy forecasts for the next two-three months.

"The confidence in the market of end-users must be restored, and they should use the utmost of the new credit rules, and the banks should be stabilized. However, things don't happen over the night", Calin Bucur added.

On the other hand, representatives of Credit Team loan brokerage firm highlight the importance of eliminating the stress test, which was designed to determine a certain credit rating afferent to scoring used by lenders when they review the loan applications. The credit report also determines the indebtedness degree.

"The removal of the stress test will definitely have a positive impact on buyers who wanted to buy dwellings and were drawbacked by this test. The fact that borrowing will become possible for high amount of debt for which the applicant to be qualified for, will be helpful also for those stand-by buyers whose credit reports were qualified only for low amounts," said Anda Marian, Head of Residential Department at MediaCity real estate advisory firm. Once with the amendment of the new mortgage rules, she said, most of the end users who were unable to contract loans, or just waited for the market confusion to vanish, will resume procedures for house acquisition, especially given the price fallout and special offers existent in the market. They will focus on real estate projects near to completion deadline, such as finalized constructions or near to delivery.

"However, the financial-economic context that caused these measures, remains, and this is not the best time to make medium to long term plans or investments. This is why the clients' behavior in selection and acquisition process will remain cautious", Anda Marian concluded.

BNR board said on January 15 it would eliminate the stress test for mortgage loan applicants, but maintained the regulation on calculating the 20% margin of incomes declared previous year at the Revenue Office.

Rents For Retail Spaces In Central Bucharest To Stagnate, Decrease In Semi-Central Areas Rent levels for retail spaces on streets in the center of Romanian capital city Bucharest will stabilize in the first half of the year, while rents in semi-central areas will decrease as tenants prefer shopping malls, according to real estate consultant DTZ Echinox.

"Street retail is currently stagnating after rents increased an average 15% in the first part of 2008 compared to the same period in 2007. Rents stabilized in the second part of last year, as the international financial crisis started to affect Romania. The most expensive areas in Bucharest are in the center, on Magheru bvoulevard, followed by Calea Victoriei, where rents in 2008 stood at EUR120-150/square meter per month," the real estate consultancy firm said in a press release Monday.

According to DTZ analysts, in the current economic context, when main street retail space consumers - banks, pharmacies and casinos - are revising their development strategies and some even discard it, the demand for such spaces will stagnate and even decrease in the case of locations with less pedestrian traffic.

"For the first half of 2009, we expect rent levels for interesting street space to stay constant, while for semi-central areas, with lower pedestrian traffic, we see an increase in the degree of availability and an implicit decrease in rent prices," the firm said.According to DTZ, retailers started leaving street spaces in neighborhoods over the past year and moved into shopping malls.

"Malls are an attractive alternative for many chain stores that expanded in street spaces in the past, because they offer wider spaces, flexibility, increased traffic and integrated marketing," DTZ said.

 

Sursa: http://www.actmedia.eu

Tags: street rents spaces market estate credit residential bnr

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