Best-case scenario: Residential market revives by end-2009
CBRE|Eurisko representatives say it is unlikely for any developer to deliver major residential projects this year as the market will settle down and projects under construction will be completed.
In 2008, the house prices fell by 30% compared to a year earlier, given the location, finishing and facilities on the table or the marketing strategy of the developer. The number of housing units purchased by investment funds slumped below 10% in 2008 from 40% in 2007.
As for the end buyers, many bookings and pre-agreements have been undone as the buyers’ credit scores were no longer eligible for a mortgage loan.
“These housing units will probably remain in the rental market in 2009. Several developers aborted the construction works for residential compounds, saying they would return the downpayments to the clients”, said the representatives of CBRE|Eurisko.
In the coming period, they say, the unjustified high prices will fall while buyers will shift their focus away from luxury apartments, and will be looking more for affordable houses. Thus, developers will have to find solutions to stimulate sales, such as discounts for one or two free parking spaces, storage space in the basement, kitchen furniture and or even discounts of the end price, if the buyer pays a 20-30% downpayment or if a client wants to buy more than one housing units.
Other developers choose to sell the houses without finishing, or to reduce the comfort standards, such as replacing the individual heating installation with district heating plants, in order to offer a lower price.
In 2008, the most popular apartments in the rental market were the three-room apartments (81%) over villas (19% of overall rented spaces) in Baneasa-Pipera area.
“The most popular properties were the three-room apartments which accounted for 42% of overall rented real estates, followed by two-room apartments with 25%, in 2008”, reads the report remitted by CBRE|Eurisko.
As for the rents, they increased by 5-10% in luxury offers, such as penthouses or classic villas, while the rents for superior and medium-superior tier fell by 5-15% in the second half of 2008 due to financial crisis.
In the luxury segment, nearly 75% of the properties were rented at 2,000-5,000 euro per month. The most popular locations are Baneasa-Pipera (enclosing Herastrau, Aviatorilor, Kiseleff, Floreasca, Primaverii, Dorobanti, Romana, University and Unirii squares).
“In 2008, the offer in Cotroceni narrowed but new areas of interest emerged, such as Stefan cel Mare, Tei or Straulesti, where the developers started the construction works for compounds of apartments for sale or lease addressed to medium and medium-superior segment”, reads the report.