22 agosto 2008

One of the indicators of residential market maturity is its awareness of key limitations and problems. Another very important matter is - what measures are being undertaken in order to solve these drawbacks.

The first edition of Bucharest Meeting Point, a conference devoted to the Romanian real estate market held in Bucharest in July, allowed the international participants an opportunity to define and discuss some of the issues faced currently by the local residential market that need to be acknowledged and resolved in the nearest future.

A matter of crucial importance is definitely the quality of the final product. Product is understood here not only as residential unit/dwelling, residential project, portfolio of units and/or projects, but also in terms of structuring the residential development with all strings attached to it. This regards all small, medium to large projects. Although developers have visibly shifted their key activities towards the middle and middle-plus segments, the offer is still rather flat in terms of project-to-project differentiation, very homogeneous, rarely promising individual character and high quality community creation. As a result, the emerging middle class of clients, with growing official steady incomes (both in volume and value) does not have a lot to choose from, as it targets mostly the 2-3 room flats or smaller single family units, rather than high end apartments and large villas.

A further issue is the price level of the new apartments. The ratio of development land price, development cost vs. high final sales price for sqm. built, is perceived as too high by the end users. One of solutions might be building higher buildings, where the PUZ allows for it. Modern residential towers are still virtually nonexistent in Bucharest, yet they can provide an interesting and alternative residential product, eliminating the high cost of land. However, the question remains, whether the developers agree to compromise on part of their profit in order to achieve a more approachable price, and also - if they agree on contributing to the neighborhood' infrastructural improvement.

As already pointed out, defining the problems is only the starting point - yet a very important one. Having identified the difficulties, what all players on the Romanian residential market need to consider is how these shortcomings can be improved on.

Being an objective and experienced observer of the market, at REAS we cannot help the impression that many of these issues could be solved, or at least better provided for, thanks to reliable and cohesive market research and information. Only following an independent assessment of the situation of the market is it possible to effectively plan residential investment, accounting for the existing competitive projects as well as the situation of potential buyers.

Since credible and reliable information are key for understanding the real, sustainable value and quality of the product (be it a flat, an apartment, a single family house, duplex or row house), REAS had inaugurated its activity on the Romanian residential market in 2007 by conducting a study of four representative urban locations: Bucharest, Arad, Constanta and Timisoara. At the moment we have completed a thorough monitoring & analytical study concentrating solely on the Bucharest residential market which allows us a complete insight into the market, the competition, the need and demand in particular segments, sales pace etc." (Fonte : Joanna Iwanowska, della società REAS)