The architect industry lives modestly at present, from public infrastructure projects and small private investments. Awaiting the thawing of lending and the return of investor confidence, architects say the focus should be on attracting European funds, based on the model of other countries that used this option to modernize infrastructure.
The government has started a set of investments in infrastructure and to consolidate public infrastructure, but they cannot make up for the lack of projects on the residential segment, while in terms of malls or new office buildings, projects that require a new design these days are very few.
In other words, architects have not yet experienced the positive signals from the real estate market sent by other companies and expect more EU funds to be attracted for infrastructure as well as for private projects, which has been proven possible by several investors.
“The development of the architectural design market after these years of crisis is non-significant,” says architect Bogdan Babici, owner of the Tecon architectural firm.
“It could grow if new axes of funding from EU funds were opened, if Romania sped up the signing of protocols with the EU such as the JESSICA [Joint European Support for Sustainable Investment in City Areas] program, if the government starts to invest in new directions in architectural transport programs (railways, airports), education, healthcare – hospitals, culture – museums, or if lending is revived in the real estate sector,” he adds.
He values the market at around EUR280 million, considering the turnover of the large companies on the market, which collect the entire value of the design contract.
Tecon last year posted a turnover of 6.2 million lei (EUR1.4 million) and a net profit of RON2 million (EUR0.46 million) with a team of 18.
Calin Negoescu, associate of Westfourth Architecture, with EUR1.1 million in turnover last year, said he in turn has recently noticed a lack of creativity from investors in terms of finding sources of funding for the new projects, so the design market “is showing no signs of revival so far.”
Karoly Nemes, founding member of Graphic Studio, whose turnover amounted to RON1 million last year, half the figure recorded in 2007-2008, says there are no foreseeable factors likely to influence the construction market in 2011. “And the 2012 election year will come, maybe then will we see some investments, but it will be rushed, lacking that vision-strategy of medium and long term development that should be mandatory for any government, irrespective of political stripe.”
Marius Calin, founder of ZIP & BDX Studio, says an annual evaluation of this market is difficult because most projects are conducted over a period of a few years from the issuing of the construction permit, but says a peak development was achieved in 2006-2008.
An architecture firm that can conduct projects that are more complex has at least eight to ten employees, but under the current crisis conditions there are various ways of paying employees, says Bogdan Babici.
Employees receive either fixed salaries, which currently average around EUR650, or a minimum salary with a bonus per project, corresponding to a percentage of the profit – in this case, the basic salary is around EUR300 plus a bonus of 10-15%.
He says one of the main problems facing the firm since the beginning of the crisis has been the decline of the market, as well as tighter competition, which manifested itself not in terms of quality, but rather financially, with some firms cutting fees so much that ultimately there was no more profit to be made.
(EUR1=RON4.3222)
(English version by Daniela Stoican)