NEPI, Sonae Sierra, Immochan, Skanska, Globalworth and AFI Europe are now the only investors having retail projects worth over EUR50 million each underway, in the context where most cities in Romania are saturated with malls and Bucharest holds over 300,000 square meters of vacant offices.
On such a market, banks are shying away from releasing money for new real estate projects, so that these investors are most of the times betting on their own funds as they believe they can find tenants for the buildings they raise. At the same time, they want to profit from the lower prices for land, work and building materials, as well as from the other investors’ lack of interest during this period.
Who’s building?
NEPI: EUR386 million was at the beginning of 2014 the South-African group’s development budget, out of which EUR91 million have already been invested by late 2013. Not all the projects included in the budget are underway, yet, but NEPI is however the most dynamic developer on the Romanian real estate market at present, considering the three shopping centers it is building in Pantelimon (Mega Mall) and Rahova (Vulcan Value Center) districts of Bucharest and in Targu-Jiu, as well as The Office office building of Cluj.
Martin Slabbert, chief executive officer of NEPI, wants to also start works this year for an office building in Victoria Square. The company also plans to expand the shopping centers of Constanta, Deva, Turnu Severin or Galati. The company funds itself primarily through shareholder contributions, but also resorts to banking loans.
Sonae Sierra and Caelum Development: EUR180 million in the investment budget of ParkLake Plaza project of Titan district of Bucharest, a mall for which the two investors started works this January after several years of delays. The project will have a 70,000-sqm rentable area, but banking funding has not been secured, yet.
Portugal’s Sonae Sierra, whose portfolio includes 47 malls with a market value of EUR5.6 billion, returned to profit last year, but the net gains of EUR3.6 million is not enough to cover such an investment, so that the future of the project, expected to be completed in 2016, depends on a bank loan.
Immochan-Auchan: EUR120 million is the investment in shopping centers Coresi Brasov and Auchan Drumul Taberei, due to be finalized in the first quarter of 2015. In Brasov, Immochan group appointed companies Bog’Art and Conarg to build an Auchan hypermarket of over 13,000 square meters and a commercial gallery of 32,000 square meters, while in Bucharest Bog’Art is building retail spaces of around 21,400 square meters and the administrative headquarters of Auchan group. The French group funds these investments from its own sources.
Skanska: EUR80 million is the cost of the first two stages of office project Green Court of Barbu Vacarescu area. The Swedish Skanska is carrying out construction works with its own company, Skanka Construction, without taking out banking loans. By yearend, the first building with a rentable area of 19,000 square meters should be delivered to tenants, while the second building will have its structure accomplished.
Globalworth: EUR60 million is the investment announced for the construction of Bucharest One tower in northern Bucharest, a project for which Bog’Art company has recently started works, with the building scheduled to be completed in the third quarter of 2015. Globalworth, a fund run by Greek businessman Ioannis Papalekas, has recently announced it contracted a EUR65-million credit line from UBS group.
AFI Europe: EUR50 million is the estimated investment in buildings AFI Park 2 and AFI Park 3 near AFI Palace Cotroceni, due to be completed in April 2014 and late 2014, respectively. The Israeli group also announced it would start works for buildings 4 and 5 of AFI Park project by the end of this month. Overall, the project will include 5 buildings with a 65,000-sqm rentable area, in the wake of investments worth above EUR100 million. The traditional builder of AFI Europe projects is Danya Cebus “sister company” and the Israeli group got banking loans only for the first building of this office project, finalized in 2012.
Who completed investments?
In the autumn of 2013, Raiffeisen Evolution completed an EUR135 million investment in Promenada mall of northern Bucharest, Portland Trust has recently delivered Floreasca Park business park, a EUR70 million investment, and the Czech-held S Group are about to finalize Green Gate office building of Chirigiu, an investment worth almost EUR60 million.
Who could start investments?
Benevo group is “threatening” to start works for Victoria City shopping center of Bucurestii Noi area this summer, French Cora and Poland’s Echo Investment are mulling the Brasov market for the construction of some shopping centers, while in Timisoara several developers are likely to start raising the second mall in the city.
Beside these, question marks about on the development of large real estate projects.
(English version by Catalina Apostoiu)