Loading ...The uncertainty on the residential real estate market, a situation which has led to a drop in apartment buyers, is leading to a change in the strategy of the companies involved in this area, both specialized and occasional investors: some investors have withdrawn, cancelled or postponed their projects, Business Standard writes on August 18.
In the past six months, prices on this segment have dropped 10% for older apartments,while the prices for new apartments stagnated, compared to the past few years, which witnessed spectacular growth, of some 30% annually.
In this new light, developers such as Sonae Sierra, one of the major players on the Portuguese market, and Energoconstructia, one of Romania’s largest construction companies, have abandoned local real estate projects.
At the start of this year, the representatives of Energoconstructia announced they would start to construct 15 buildings with 4-11 storeys, with some 3,000 apartments, on a plot of land of 67,000 sqm, on an investment evaluated at some 100 million euro.
In June, Portuguese Sonae Sierra developer and Irish Caelum Development decided to abandon the development of one of the residential towers included in the original Park Lake Plaza project, one of the largest mall complexes announced for Bucharest, considering that the current market justifies a reduction in expenditures, even if such a move means less income for the developers, reminds the cited daily.
The companies decided to build a sports facility instead of the residential project. "I think that if there had not been for the financial crisis, this year’s market growth would have equaled last year’s. I do not think this is a normal maturing. The maturing would have come anyway, if it had not been for the international financial crisis," said Ilinca Paun, Residential Division Manager for Colliers International. According to her, the mating would have come slower and the interest in purchase would not have dropped suddenly. She added BNR imposed a forced maturing of the real estate market to keep inflation under control.
The residential market in Romania reached impasse with the first rumors related to the global real estate crisis. The rumors have led to a stand-by and freezing state of the deals. In H1, the number of the deals with new apartments halved versus H1 2007. On the segment of the old apartments, the market was crowded with offers as the buyers wanted to catch the peak point of the price rise. This surplus in offers has led to a slight decline in prices.
The luxury apartments segment appears to be the only still relatively unaffected by the current sales deadlock, even though the number of agencies selling such homes has halved, since Q2, the monthly target of signed contracts, say the main real estate consultancy companies on the local market.
Among the investors on the luxury home segment were businessman Ion Tiriac, and the owners of the Baneasa project.
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