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March 3, 2021

EUR 1 bln projects put on suspension in Bucharest

The investors’ exodus from the Romanian real estate market now has a financial dimension too. “In Bucharest, there are projects worth EUR 1 bln, with land being already purchased and bank investments already made, which have been put on suspension during the last two years,” the chief-architect of Bucharest District 3, Stefan Dumitrascu told the ‘Gandul’ newspaper.

Bucharest has some two million square meters of unfinished buildings, in various stages of completion. Also in Bucharest, District 6 has lost investments worth some EUR 8 M. The bulk of the sum should have been contributed by a Spanish company which was planning to build a residential area, but got into financial trouble and dropped the project altogether. The least affected seems to be District 5 of Bucharest. The District Mayor’s office announced that there are no plots of land suitable for the construction of large residential projects or malls in the District. The land designated as residential area was divided into small plots, for family homes. Recession also showed its ugly face in the north of the Capital, where investors that had obtained all approvals and documents could not complete, or even start their projects.

Real estate projects worth an approximate EUR 500 M could enter insolvency or bankruptcy procedures in 2011, most of them in the residential segment. The same situation could also affect companies that purchased plots of land, but did not even start to develop the buildings, according to Coldwell Banker forecasts. Real estate projects with a cumulated value in excess of EUR 200 M are in either of the two situations.

The segment of office space will be spared the worst of the crisis, due to lower development costs vs. monthly incomes, and better locations. The rental of logistic areas stays on a satisfactory trend. Just yesterday, ProLogic, a global leader in providing distribution space, has announced the signing of a new rental contract for 20,790 sq.m. in Building No. 4 of the ProLogic Park Bucharest A1, with Geodis Calberson, a logistics and international transport services provider controlled by SNCF (the French Railways). Additionally, Geodis extended the rental contract for 3,490 sq.m. in the Building No. 2 of the same park. After the two transactions, the whole area of ProLogis Park Bucharest A1 has been rented to various customers. On the other hand, the prices asked by the owners of new houses in Bucharest and in the main counties of Romania decreased by more than 42 pc this year, compared to 2008, with the steepest decline rates being registered in the Capital and in Constanta, according to data provided by the internet portal imobiliare.ro. The most significant decline was reported in Bucharest, where the average price of family homes and villas in December this year was 19.2 pc less than a year ago, at 1,412 EUR/sq.m.

The economic downturn granted Bucharest parks a reprieve from partial destruction, at least for now, as real estate projects had been announced in almost every park of the city. In the Opera Park, crisis prevented investors from building a three-storey hotel, with gym and tennis courts. In a different move, the Bucharest Municipality signed the retrocession papers for 12 hectares of the IOR Park, which should have been covered by concrete, blocks of apartments and a mall.

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