There are 18 residential buildings in construction in Primăverii, Aviatorilor-Kiseleff and Dorobanţi-Capitale; the three neighborhoods are considered to be the epitome of residential luxury. By the end of the year or in 2015, depending on when they will be completed, these blocks will provide approximately 200 luxury apartments. Other four buildings of luxury homes have been completed in these areas this year. The fact that investors have become once again interested in luxury homes is clear, especially if we consider that in 2012 and 2013 only eight luxury blocks of flats have been built in the same areas, according to a study by HomeFinders.ro, a real estate site. Each square meter of dwelling size costs 1,400 Euros, making the investment in the 22 blocks of flats completed this year or still in construction amount to approximately 35-40 million Euros.
The most attractive area for developers is Primăverii, where there are 11 buildings, already or nearly completed. Kiseleff – Aviatorilor comes next, with a total of nine projects, followed by Dorobanţi – Capitale, where a single project has been completed this year, with another one scheduled to be completed the next one. Thus, Primăverii neighborhood comes first with 49 new buildings constructed after 2000, while Kiseleff – Aviatorilor has 47 such projects and Dorobanţi – Capitale only 22.
‘2014 has begun with a renewed interest from developers in luxury projects. It comes after a long period of lapse, in which no new luxury blocks of flats have been constructed and only existing luxury homes have been bought or sold on the market. We’re also witnessing a higher demand of land in top locations, which only enforces the idea that the luxury market is recovering and that the next period will only prove to be more dynamic,’ said Mihaela Pană, head of the residential department of DTZ Echinox, the company which managed the selling of a historical monument villa at the price of 4 million Euros, the most expensive real estate transaction this year.
At the moment, there are approximately 8,000 new flats on the market in Bucharest, including those constructed in the last years or older ones which are on being sold again. According to the calculations of HomeFinders.ro, luxury homes account for less than 5% of the new flats market; it estimates that under 400 such flats are available for sale in the Primăverii, Kiseleff-Aviatorilor and Dorobanţi-Capitale areas. At the average price of 200,000 Euros a flat, the total value of the luxury homes market comes to around 80 million Euros. Even if this means the market’s value has been cut to half since the economic crisis, it is still attractive for any real estate developer.
But it also means that, because of the low volume of transactions, to recover the money one has invested is a slower process than before the crisis. According to HomeFinders.ro, only 50 luxury homes have been sold since the beginning of the last year and until August 2014, while in 2007 alone there have been around 200 such transactions.
New projects, new prices
In the last six years, the prices have dropped by approximately 40% in the case of luxury homes, from an average price of 4,000 Euros/ m2 to 2,500/ m2 today.
‘The average price of a luxury flat is between 3,000 Euros/ m2 of dwelling size in top areas – Primăverii, Aviatorilor, Kiseleff – and 2,000 Euros/ m2 in the Dorobanţi area. We have in our portfolio flats in the Herăstrău area that cost between 3,000 Euros/m2 (with park view) and 1,800 Euros/m2 in the latest luxury project available: 49 Gafencu,’ says Andreea Comşa, managing director at Premier Estate. The block of flats named 49 Gafencu, built by Ciprian and Cristina Anghel, who have built over 100 luxury flats in Bucharest, will provide a number of 110 apartments in the first semester of 2016, at the total cost of 30 million Euros. Prices range from 139,000 Euros for a two-room flat to 700,000 Euros, VAT included, for an apartment at the eighth floor of the residential complex.
Another six floor block of flats on the Sfinţii Voievozi street in downtown Bucharest will be completed in March 2015. Israelis Moshe Turgeman and Tomer Barhom, who have constructed the commercial center Euromall Piteşti, have invested 6 million Euros in the 36 luxury flats of the Vernescu Residence project.
Businessman Nicolae Badea, the former president of football team Dinamo Bucharest, will also complete a block of flats (35) on the Polonă street, near Piaţa Romană. In the case of Celeritas Residence, prices range from 78,000 Euros for a one-room flat on the first floor to 546,000 Euros for a penthouse.
Lent to foreigners
It seems that the trend of past years of lending homes rather than selling them is still going strong. Some of the projects in the luxury area of Bucharest are exclusively destined to lending. The reason for this trend is that sales are poor, while lending permits one to recover the investment in 7 or 8 years. In the area Şoseaua Nordului-Herăstrău, foreigners are dominant on the luxury flats’ lending market, with only 15% of the tenants who have moved in in this select area in the last two years being Romanians, according to a study of the real estate company Nordis.
If we look at flats’ acquisition, the situation is totally different, with Romanian citizens being the ones that are more likely to buy property in this area, only 10% of the buyers being foreigners.
‘The ratio between investors and final buyers is now 20%-80%, in contrast with the period between 2006 and 2008, when it was 40%-60%. This is due to the somewhat drop in investment efficiency, caused by the drop of the average rent in contrast with the real estate boom and by Romanian citizens’ preference of being owners,’ mentions Emanuel Poştoacă, general manager at Nordis.
What luxury is
Several residential projects, such as Asmita Gardens, Ibiza Sol or Green Vista – which are now insolvent or turned over to the financing bank – have come to be regarded as luxury projects before the crisis, because the market consisted of few projects of this kind and information on the topic was rather scarce. Today, even if these projects have something more to offer than the other residential projects, they are unanimously viewed by real estate consultants as medium-end projects.
‘In order to be considered as luxury, a residential project must have a very good location (ultra-central, in the North area, next to the North area parks or to a forest) and an unique concept; it must also have a low number of flat and finishings and facilities addressed to a specific group of buyers,’ explains Ionuţ Bălău, managing partner in Coldwell Banker Affiliates of Romania.
This consulting firm is the only agent of the biggest luxury residential complex in Bucharest, Alia Apartments in the Arcul de Triumf area, which still has available for sale 12 flats of the 124 it consists of. Ten apartments have been sold this year, while the project is insolvent since February 2012. According to a Coldwell Banker analysis, the typical buyer of a luxury home has a family income of over 10,000 Euros a month, is an entrepreneur or has a top management position and is the owner of several real estate properties and cars. The firm’s estimation is that over 100 luxury homes are being developed at the moment in Bucharest and around it, including small sized projects.
40 million Euros have real estate investors poured into the construction of 22 luxury buildings in the Primăverii, Kiseleff – Aviatorilor and Dorobanţi – Capitale areas
• Iohannis e în stare de ȘOC! Cine ar putea să-i ia locul în 2024
• Breaking news! Dragnea a dat marea lovitură! Victorie mare în instanţă. Judecătorii i-au dat dreptate
• Veste ȘOC pentru toată România! Lovitură totală de la Uniunea Europeană
• A fost descoperită cea mai periculoasă tulpină de Covid-19 din lume. News alert