The autumn in real estate


autumn

Bucharest, Romania 2015

The last couple of weeks gave us, Romanians located in Bucharest, the chance to be in contact with the latest trends in the residential segment of local real estate. There is this tradition of organizing fairs dedicated to the ‘real estate’ market, during autumn and spring, reflecting however just the housing progress. These fairs and exhibitions are entirely dedicated to residential segment, which is a loss.

It is a positive feeling I have had visiting the fairs. Excellent news on the latest developments, which are always a sign of market growth. Among the appreciative trends of the Bucharest market, the following stood-out:

  • New developers, local and international, have plans of raising the market
  • New locations are valuable in town, well known as former industrial platforms or simply open neglected green fields, such as Filaret, Drumul Taberei, Prelungirea Ghencea and further towards Militari, Theodor Pallady, etc.
  • A dynamic of small to medium projects of approx. 30 – 50 units per project
  • The planning of larger projects, set-up in several stages, cumulating over 1,000 units (I counted 3 in town, located in 2 cardinal positions: Militari & Prelungirea Ghencea– West and Berceni – South, J)
  • Local developers who have gained experience in the past with small projects, are now creating new products of a larger scale
  • The medium class is targeted as the future buyers of the products available in massive stock

Counting the number of units announced to be delivered in 2016, in well known and established neighborhoods of Bucharest, the new stock to be delivered reached easily 2,500 units (+/- 15% of those small projects for which no reference could be found in the materials provided). Adding the peripheral projects, counting approx. 700 units, including Corbeanca, which is again on the real estate map) we can say that by the end of 2017, the market brings easily over 3,000 new units of apartments and houses.

Prices are still in a balanced mood. If towards the border of the city, in outlying neighborhoods, the price per sq m starts at approx. 500 euro, coming closer to the round area defined as downtown, the prices go up to 1,300 euro per sq m, built area. The North, with several representative projects, is within this range. As mentioned above, products promoted on the large market are for medium class. VAT excluded. Mainly, 5%.

Size is kept under the radar. 2 room (known as 1 bedroom) apartments are of approx. 55 sq m, built area, while 3 room (2 bedrooms) of 75 – 80 sq m built area. Prices for parking spaces start at 5,000 euro going up to a max of 12,000 euro, excl. VAT. So, a studio could range from a minimum of 29,000 euro to a maximum of 45,000 euro, while a 3 room apartment could reach 85,000 euro, excl. VAT.

Houses, or villas, whether in a row or stand alone, have standard sizes 110 sq m built area, for ground floor plus 1 or 145 – 150 sq m of built area for ground floor + 2. Lots vary between 200 and 300 sq m, foot print on ground 60 – 70 sq m, free garden approx. 150 sq m. 2 or even 3 garages/parking spaces. The average price for a house is 85,000 euro plus VAT.

Lots of offers, new projects, new developers. Is the market booming?

The not so attractive issues could be summarized as:

  • Weak communication materials (flyers with lack of data, weedy quality of layout)
  • Fragile transparency on information between the project representatives and the potential clients
  • Lack of construction details and technical specifications in the materials
  • Boring expo stands, with no appealing or distinctive design
  • Sales teams with low competences representing the developers
  • Uncreative promotional campaigns

In FAIRness of appreciating those that have became known as examples of high quality performance in developing and selling, let’s reconsider the approach of a most exhibitors that were saying “zero commission” when in fact selling directly from the developer, or stating “prices starting from…” when in fact the potential buyer ‘discovers’ that a particular apartment at the price of “x” is no longer available and the view is not actually to the nearby park (3 x sic!).

There were exceptions, certainly, of innovative stands revealing the competitive advantages of the residential project, of well trained teams open to build a productive dialog with potential clients, of great brochures with contents full of descriptive information or, of well planned price policies. But what if, in the future, the exceptions will be the weak and not the strong?

The main purpose of such events is to offer valuable information and options, to those who are looking to make, most of the time, a once in a life time investment. This is why, considering the market practice and past experiences, I think that including new elements would add value, attract the interest of the participants and visitors and continue an educational process of all players in the market.

  1. Workshops and seminars dedicated to: construction and technical specifications in residential, interior design for various layouts of apartments, financial education for buying a home, mortgages for Prima Casa and more, much more topics to be addressed.
  2. Inviting developers from the retail and office segment to join these developers with medium to large residential projects and showing the valuable urban design of that particular neighborhood where an entire new urban planning is considered.
  3. Legal workshops for contractual terms and conditions, so that future dilemmas on blinding signing will be avoided.
  4. Case studies for reshaping the urban area of a certain neighborhood, with specific designs of the exterior functional architecture.
  5. Seminars of suppliers and producers of construction materials presenting the products they create for better, contemporary living conditions.

Would you enjoy a next fair that organizes, besides the classical tour of properties, some of these possible activities?

 

photo credit: weknowyourdreams.com