Highlights of the residential market in 2008

Romanian real estate market felt a glimpse of the financial crisis, prompting developers to abort construction of their real estate projects. Of over 8,000 housing units expected to be delivered, many of them were put on the waiting list.

“The year had a forceful start. The first signs of the downtrend whipped into shape in early summer. Subsequently, more and more projects, whose delivery dates were established for the second half of the year, were put off. In parallel, starting with the second half of this year, the market of the old housing units began to take a nosedive on a monthly basis,” said Adrian Ghimpau, director of Coldwell Banker Affiliates Romania’s residential department.

According to Coldwell’s representative, we cannot yet estimate the exact number of housing units delivered this year, as it will be revealed in January 2009, most likely. Nevertheless, players can only forecast the number of units to be delivered in 2008.

“Approximately 8,000 units were expected to be delivered in 2008 in Bucharest and in adjacent areas. The gap between the number of scheduled units and the ones delivered was triggered by the sagging demand, as certain developers slowed down construction pace and their financing were blocked,” Ghimpau stressed.

What will happen to the delayed projects?

One of the developers that postponed the delivery of a residential project was the Greek-based Quality Living Developers (QLD). He announced it would deliver the Waterfront project in fall, a residential compound located in north-eastern Bucharest, near Tei Lake. The project would have included 16 mansions and 208 apartments, in nine blocks. In early summer, Nick Stathakis, QLD’s CEO said the construction works had started and they would most likely complete by the end of 2010.

“The residential projects postponed until summer are projects for which the construction works had not yet started and that, as a result, will be delivered in 2010 or even 2011. The market will feel the pressure exerted by these apartments starting with the second half of 2009,” said Evelina Necula, Head of Marketing Department at DTZ Echinox.

Businessman George Padure, who served as a mayor of sector 1, Bucharest in 1996-2000, slowed down the construction pace for Sigma Residence & Gardens project located near Plumbuita Lake, the first delivery phase following to be delayed by three-four months.

“It is healthier to take a slower development pace, rather than having to deal with problems in the end. We have slowed down engine, because the delivery date of the first phase was the end of 2009, but I will be able to extend it up to April 2010,” said George Padure earlier this month.

How did prices evolved?

Adrian Ghimpau with Coldwell Banker said the market of new housing units see a price freeze, while the old housing units market had a roughly 25% decline.

“More and more developers started to adopt discount policies lately – nearly 15% for new dwellings. In case of the old ones, the range is quite broad, as there were cases when owners drew housing units that were for sale, feared by the drastic price fall. However, there were cases when prices were negotiated with more than 30%,” Ghimpau added.

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