1. Asmita Gardens insolvency
The failure of 2011 is the insolvency of the developer of residential compound Asmita Gardens in Bucharest, a EUR120 million investment in seven towers with almost 800 apartments. The project, considered a landmark until recently, included apartments with prices of EUR120,000 to EUR1 million, but the lawsuits involving it, the crisis and management problems caused more than 400 homes to remain unsold. Alpha Bank, the main lender, went to court asking that the company be declared insolvent in an attempt to get back at least part of its money. Alpha had lent over EUR70 million for the development of the complex, which is now managed by a court appointed administrator, Euro Insol.
2. Repurchase of City Mall
The first shopping center in Bucharest to go bankrupt, City Mall, located in the south side of the city, was sold this fall as part of the liquidation process, and was repurchased by Greek businessman Ioannis Papalekas. He undertook to pay EUR17.3 million for the project with a 19,000 square meter lettable area, which he had sold for EUR103.5 million to an Australian group five years ago. The Greek millionaire, who had also developed the UpGround project in Pipera, thus bought the project back for six times less. The mall’s liquidator was Casa de Insolventa Transilvania (Transilvania Insolvency Firm) and its main creditor was UniCredit.
3. Departure of Ali Ergun Ergen
Ali Ergun Ergen, who along with Iasi businessman Iulian Dascalu can be considered the most experienced local shopping center developer, announced he was leaving his position at the helm of the Baneasa Shopping Center at the end of November, after a six-year stint there. Ergun arrived in Romania in 2000 to manage the first mall developed on the local market. Bucuresti Mall, and then developed the Plaza Romania project, again located in the capital city. In 2005 he agreed to manage the shopping area of the project developed by Gabriel Popoviciu, an about EUR500 million business a year. He will be replaced by a Greek executive, George Argentopoulos at the beginning of next year, who used to work for Romtelecom. Ergun will remain a consultant for the Baneasa project, and did not provide any information about any future projects he might have.
4. Construction of tallest building in the country restarted
Construction work on the Sky Tower, a 36-story 137-meter tall building announced on the local market in 2007, is now above the ground level, with 12 of the 36 stories already done. The project developed by Raiffeisen Evolution was bought by Raiffeisen Bank Vienna and the first six floors will be occupied by the local subsidiary of the Austrian lender. The project, which is close to the Aurel Vlaicu subway station, will be finished by the end of next year and welcome its first tenants in 2013.
5. New malls in Constanta and Arad
The fall of 2011 was the best in the last three years in terms of new shopping center openings, as six projects were completed in Constanta (Maritimo), Bucharest (first phase of Colosseum), Craiova (Electroputere), Arad (Galleria), Oradea (Oradea Shopping City) and Botosani (Botosani Shopping Center). The six projects total almost 200,000 square meters and have such tenants as Auchan, Cora, Carrefour, H&M, Zara and Cinema City.
6. Even cheaper apartments
Home prices continued to go down this year, as well, though at a slower pace. The decline in Bucharest was approximately 5%, as calculated by ZF. Average prices of old three-room apartments in Bucharest are now down to EUR78,000, from EUR82,000 at the beginning of the year, and EUR139,000 in 2008, when the price decline started. Consultants do not expect a reversal of the trend in the first half of next year, considering potential buyers prefer to wait and see what happens given the uncertainty in Europe, while lending remains low, as banks have a lot of foreclosed homes on their hands.
7. Immofinanz is now sole owner of Adama
Adama, the foreign developer, which completed the highest number of homes on the Romanian market, about 1,500 units, was taken over entirely by Austrian investment fund Immofinanz, which paid EUR42 million for 70% in the company. Immofinanz had owned part of the company for a number of years but this year they bought the rest of it. Immofinanz acquired a company that has 500 unsold apartments, almost 50 hectares of land for 10,000 homes and a management platform to develop the projects Immofinanz owns directly.
8. First families move to Planorama
The Planorama apartment complex in Bucharest, which had turned into the biggest real estate scandal because of repeated delays in its delivery, welcomed the first several dozen families who will live there this year, four years after they were supposed to move into their new homes. Developer Euro Habitat is insolvent, but the first buyers came up with the money to finish a 280-apartment building of the four of the project.
9. Real estate financing granted again
UniCredit, BCR, BRD and Bank of Cyprus granted tens of millions of euros in funding for development of new real estate projects this year, and most of the money went to developers of shopping centers. The residential market, which is still giving trouble to banks because of the accumulated past due loans and price decline, did not see any “fresh money” though.
10. Argo becomes largest owner of shopping complexes
The ranking of the owners of shopping complexes changed in 2011 following the deal whereby UK investment fund Argo Real Estate took over the retail parks developed by Omilos in Oradea and Iasi. Argo already owned Shopping City Sibiu and Shopping City Suceava so that it now owns 200,000 square meters of retail space, more than businessman Iulian Dascalu and Austrian fund Immofinanz. The deal was in fact a swap whereby the former owners of Omilos got about EUR20 million worth of Argo shares.
(English version by Loredana Fratila-Cristescu)