Real estate investors focus on development

Last year’s fever in purchasing lands and projects was replaced in 2008 by the one for development and financing. Developers and investment funds have grouped on certain projects, following to start the construction of those that can bring them the highest revenues.

The Austrian fund of investments, Immoeast, the biggest player on the real-estate market from Romania, where it owns in different stages of development properties of 3,5 billion euro, announced yet from spring that will pass from purchasing to developing the projects. Since then the message of this fund hasn’t changed. It was even strengthen. Immoeast started to sell properties, it didn’t buy anymore and intends on increasing its revenues through administrating the properties.

Tendency in increase

Successively, other investors in domain, such as Mivan, that has in project the construction of ten commercial centers in Romania, started to take over the example of Immoeast. „If there turn up opportunities we’ll purchase lands. But firstly, we want to finish the projects for which we have land and afterwards to think about purchasing other surfaces. We already have financing for two of the projects”, Shai Fixler, General Manager within the real estate developer Profit Building Industries, which owns lands with a total surface of over 27 hectares in Romania, the investment in those being of 15 million euro, and their acquisition started in 2004 and lasted about three years, also mentioned. The lots are directed for seven projects, situated in Ploiesti, Constanta, Bucharest, Piatra Neamt and Satu Mare.

Otherwise, the land reserves purchased during the past years represent the main reasons that sustain the investors’ attitude for directing towards the construction of projects. According to the real estate consultancy company DTZ Echinox, the real estate developers have started to work on only about 20% of the lands they own. For example, another real estate developer Cooper Beech which, in 2007, sustained that he owns about 600 hectares in Bucharest hasn’t announced for the current year other investments in terrains. Finalizing all the projects situated on the lands of this investor will last more then ten years. Also, the lands with big surfaces announced for sale at the beginning of the year are still in the same stage, what strengthens the intent of the developers of first executing some projects and then starting to purchase new lands.

Financing

For ending well the projects, partnerships aren’t anymore the exception, but the rule on the Romanian real estate market. So, for realizing three of its projects, Profit has associated with the real estate developer Caterata, which, is also a joint-venture between Immoeast and the Israeli developer New Horizon. The first collaboration between these is represented by the residential complex Odyssea Residential, situated in the area Sisesti in the North of Bucharest. The district includes 156 apartments, that will require an investment amounted to 18 million euro in a terrain with a surface of almost 0,9 hectares. The second project of those three is another residential complex with 1.000 residences and commercial spaces from Satu Mare, for which they dispose of a land with a surface of 10,5 hectares, the investment being of 70 million euro. And the third project is another district, completed by commercial spaces, that will be situated in Piatra Neamt and for which they own 2,8 hectares. The total value of the investments in those three projects is of 100 million euro. ”For the other projects that we have we are looking for another partners and after that will start working”, Shai Fixler adds.

Profit owns two more lands in Ploiesti. On one of these, with a surface of 1,4 hectares, the company intends to realize a building for offices with a surface of 32.000 square meters. The second lot from Ploiesti, with a surface of 7,6 hectares, is directed for 1.800 residences and commercial spaces.

Profit, owns also in Constanta a land with a surface of 4,7 hectare, which plans on using for 900 apartments and commercial spaces.

Moreover , the developer owns 1,25 hectares in the area of Ghencea from the West of Bucharest, where it will build about 450 apartments and commercial spaces, and another 0,33 hectares in Piatra Neamt for building offices. The value of investments forecasted for these five projects is of about 500 million euro.

Money

Besides owning lands and the established partnerships, the investors’ strategy is also motivated by the lack of liquidity from the market.

The next step made by the real estate investors is of choosing the best projects, respective the ones that can bring the highest revenues in the present. So, among the projects for which they own land the developers start working to the residential ones, situated in Bucharest, and with a number between 150 and 1.100 units, and the ones of offices. Georgiana Sandu, director of the residential department to the real estate consultancy company Neocasa, outlines that, at the moment, there is being noted an increase of the number of developers which invest in offices.

Caterata follows the same strategy

The representatives of Caterata, also focus on development and not on purchasing other surfaces of land. Besides those three projects which they have with Profit, the company also owns lands with a total surface of over 19,2 hectares for other three developments. Of those three individual investments, the first to which they will begin the construction works is the district Cernica Park, situated in Pantelimon, with 1.100 residences, disposing of a land of almost 8,58 hectares. A similar project can be realized at Caterata and in Brasov, where it owns a lot with a surface over 8,84 hectares. Moreover, the developer has purchased also a land with a surface of 1,8 hectares in Snagov, where it will build a residential complex with 200 villas. Per total, the value of investments in projects realized only by Caterata will exceed 200 million euro.