26.01.2024
What are the main challenges & opportunities for the residential market in 2024?
“The main challenge for the Bucharest residential market in 2024 is the urbanistic blockade. Its effects are already showing, with building permits being issued in 2023 for 0,8 mil. usable square meters versus 1,7 mil. usable square meters in 2022. In this context, the new supply of apartments will be one of the lowest in the history of Bucharest’s residential market, and, as the demand is still strong, this will put pressure on the prices, which have already grown by 10%, YoY, in December 2023.
The last quarter of 2023 showed us that the demand is there, as residential sales picked up the pace. It is true that this growth was driven by the elimination, starting with January 1st, 2024, of the minimum 5% VAT quota, but this only shows that the right product, adapted to the demand’s fundamentals and purchasing power, is set for success.
The demand is currently somewhat affected, for the time being, by the fact that the National Bank of Romania keeps the key interest rate at 7%, and this means the accessibility of mortgages and loans for potential customers is still difficult, but things will improve in H2 2024 from this point of view.
At the same time, as real estate developers are not able to start new projects because of the suspension of the PUZs, there will be a ripple effect on multiple horizontal and vertical levels, from the drop in property taxes for the municipality and in labor-related taxes for the central authorities to decreasing demand for building materials and services of construction companies.”
What are the company’s business targets for 2024?
“In theory, our objective is to develop 500 new apartments each year on the residential market in Bucharest. We are not able to start a new development in the coming months because our projects are heavily affected by the urbanistic blockade and by the lack of dialogue with the authorities.
We support responsible real estate development and have six major urban regeneration projects in Europe in our portfolio, totaling 7,000 homes, 300,000 square meters of office space, 150,000 square meters of commercial space and 110,000 square meters of green space. Despite this significant experience, which involves partnerships with local authorities in cities such as Budapest, Warsaw, Poznan, and Birmingham, we have not managed to establish such collaborations in Bucharest, although we have always shown our willingness and have even taken steps in this direction.”
What were the main business results for 2023 – in terms of apartments sold?
“We obtained the occupancy permit for the second phase of Parcului20, our project in Expoziției area in northern Bucharest in February 2023 and we reached, in December 2023, a 95% level of sales of the total of the 485 apartments comprised in both phases of the project.”
