Back into the boom period, in the year 2007, for instance, investments of around EUR2 billion would be set in motion, but those times are long gone, considering the value of the projects set off last year reached only EUR300 million – EUR350 million.
Plans for 2012 were more optimistic, though, as the construction of six shopping malls in Bucharest alone was expected to start. Only one of the six malls is currently under construction.
Few people would have expected a fourth year of decline on the residential segment, and many believed office space developers’ business would pick up as they prepared to meet demand from companies in 2013-2014.
Four significant investments broke ground in the first eight months: three shopping centers, Promenada Mall and Auchan City Giulesti in Bucharest, AFI Palace in Ploiesti and only one large office space development – Pipera Business Park in northern Bucharest.
Promenada Mall and Pipera Business Park require the highest investments of the four, about EUR100 million and EUR70 million.
AFI Europe’s development in Ploiesti will cost EUR40 million, while Auchan’s project on a plot formerly owned by Grantmetal plant in Giulesti (NW Bucharest) will take a EUR20 million investment.
Out of the six malls scheduled for this year in Bucharest, five were put on hold. Ireland’s Caelum has been planning and designing the ParkLake Plaza mall in Titan (east of Bucharest) for six years now but judging from the blue fence surrounding the site, work has not started yet.
Also in eastern Bucharest, near the National Arena stadium, work on the Mega Mall should begin this fall, but the investors, Real 4 You, have not made any announcement so far.
Victoria City in Bucurestii Noi (northern Bucharest) is under review again, after the South African-held NEPI dropped the partnership with Michael Topolinski because of a too high loan taken out to buy the land. No construction work has begun on the former industrial sites of Helitube (Colentina Mall, NE Bucharest) and Laromet (AFI Palace Bucurestii Noi), either.
Under the circumstances, only Raiffeisen Evolution went ahead with its mall project in Bucharest and hopes to be done by next fall. The project is located in the Floreasca area (north-central Bucharest) and has attracted tenants like Billa, Zara, C&A and H&M.
New shopping centers were expected to begin development in other cities such as Craiova, Galati, Brasov and Timisoara (southern, eastern, central and western Romania) but the developers owning land in these cities have either not secured all the necessary permits or are having trouble securing financing, therefore they have not started work yet.
Another office project besides the Portland Trust developed buildings in Pipera Business Park should have been under construction this year, Ana Tower, announced by GTC and businessman George Copos, near the Crowne Plaza Hotel in northern Bucharest. Israeli-held Plaza Centers, too, said it was planning to begin work on an office building on the Dambovita Center site (downtown Bucharest), but nothing has been done yet.
The main reason why these projects were put on hold may be the high vacancy rate of office buildings in Bucharest, 13%-14%, which means 250,000 to 300,000 square meters of office space available in this city.
As for the residential markets, specialized websites, as well banks’ or insolvency firms’ portals are displaying thousands of ads for homes, therefore no significant investment was started this year, either.
“In times of crisis, real estate is about the last to rebound. Sales of electronics are the first to pick up, because these things are cheaper, and then people start thinking about buying a home,” says Valentin Ilie, chief executive officer of real estate consultant Coldwell Banker. “This year we’ve gone through a time of uncertainty similar the shock of 2010, when VAT was hiked and salaries cut, therefore people’s appetite for buying is close to the all-time low.”
(English version by Loredana Fratila-Cristescu)