Download BR Business Review Focus on the real estate market 21.11.2012

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BR Business Review
Focus on the real estate market
21.11.2012
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QUESTION to be ANSWERED..
Adapting to a new reality – how will future projects
differ from the ones built during the construction boom
and how attractive is it to invest in Romania at present?
Building investment markets, securing fundamentals
and financing.
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TABLE of CONTENTS
I.
Major projects in the pipeline (Bucharest/main cities)
II.
Latest projects announced
III.
List of active developers
IV.
Macroeconomic indicators
V.
What does the equation miss?
VI.
Actual needs/demand
VII. Securing financing
VIII. Building investment markets
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Major Projects in the pipeline (Bucharest/Major cities)
-SkyTower
-Floreasca Park
-Green Gate
-Hermes Business Campus
-AFI Business Park II
-Promenada Mall
-Vulcan Retail Park
-Cora Alexandriei
-Kaufland Mihai Bravu
-Auchan Giulesti
-Vitan Mall & Romania Mall; extensions
-Carrefour Galleria Mall Brasov
-City Business Centre Timisoara 5
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Latest projects announced
-Green Court
-The Mark (S Immo)
-Nusco Tower II
-Skoda Tower Aurel Vlaicu; provisional name
-Anchor Group Office Building II; provisional name
-Tricotaje Office Building Cluj-Napoca; provisional name
-Frigocom Residential (98 apt)
-Edenia Residential III (126 apt)
-Optima Residential II (86 apt)
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List active developers
- NEPI; office/retail
- Portland Trust; office
- IMMOFINANZ/ ADAMA; residential
- AFI; retail/office
- ALINSO; industrial
- HELIOS Phoenix; industrial
- RAIFFEISEN EVOLUTION; office/retail
- WDP DEVELOPMENT RO SRL; industrial
- ANCHOR GROUP SA; retail/office
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Macroeconomic indicators
Romania
Real GDP (annual percentage
change)
Consumer Prices (annual
averages percentage change)
Consumer Prices (end of period)
Account Balance (percent of
GDP)
Unemployment rate
Average
1994-2003
2004
2005
2006
2007
2008
2009
2010
2011
2012f
2013f
2017f
2.1
8.5
4.2
7.9
6.3
7.3
-6.6
-1.6
2.5
0.9
2.5
3.5
53.2
-
11.9
-
9.0
-
6.6
-
4.8
-
7.8
-
5.6
-
6.1
-
5.8
3.1
2.9
3.6
3.2
3.2
2.6
-
-
-8.4
-
-8.6
-
10.4
-
13.4
-
11.6
-
-4.2
-
-4.5
-
-4.4
7.4
-3.7
7.2
-3.8
7.0
-4.4
-
Source: IMF report – October 2012
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What does the equation miss?
Reverse thinking, creating investment
markets, based on:
- Actual needs/demand
- Financing criteria
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Actual needs/demand
Changing character of the market
-Focus cities (ex: Ploiesti is the only secondary with 2 malls under construction)
-Focus particular segments
-Agriculture grows popular
- IMF supports drop of VAT to 9% (for basic food products)
- Romanians have to support this consumption patterns
-Retail
-vacancy drops; seasonality (Christmas)
-1 shop every 2 days: Mega Image, Kaufland, Cora, Auchan, Hornbach
- Textile business (efforts to be preserved)
-Focus large scale projects
-Photovoltaic park in Mehedinti (12MW, serves 5,000 domestic users)
-Nuclear stations 3 & 4 to start construction in Cernavoda; state guarantees
asked
-Siret/Baragan canal (real estate developments, transport, flood preservation)
has caught the eye of private investors
-Distress market start to appear (willing buyer/willing seller)
-Market in Euro (real estate, cars, bills for telephony)
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Securing Financing
-41 banks in Romania
-17% bad loans average
- up to 25% for large Banks
-Banks facing:
-BNR push to take more provisions/losses (reflects financing)
-Carrying costs on portfolios: financing, expenses, administrative
expenses, cleansing cost, loss of value
-Battling Fraud
-Companies enter into insolvency fraudulently
- Bodies of the state supportive (courts in favor of end buyers etc)
- Internal (employees)
-Banks willing to:
-Stimulate consumption patterns
-Automatic branches network
-Preferential terms for loans for good payers (Bancpost/RBS)
-Grant financing
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Building investment markets
Chain reaction: Economy -> Banks -> Investments in real estate in a
STABLE environment
-Less elaboration and more focus on what needs to be done to improve the
economic environment
-Ensure a predictable economic/investment environment
-Develop sector based strategies
-Adapt rules that are universally applied
-Majority of the loans in RON, decreasing trend, BUT:
-Effort to maintain reference interest rate 5,25% (adjustment of reference
indices establishing the cost of loans)
-Effort to join the Eurozone in 2015
-Legislative elections not anticipated to drive much change
-Absorb European Funding (crucial for Banks), positive influence on:
-Exchange rate
-Smooth reimbursement of loans
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