Conadi: One opportunity for the residential market is to deliver high-quality projects adapted to buyers' needs

Romania's residential market has started to recover, coming closer to normality and likely to achieve its maturity soon, according to Daniela Barbu, Marketing Communications Specialist at Conadi.

2018-04-04 09:59:10

"While the low and medium-low segments were the first to recover due to the "Prima Casa" programme, and the medium segment has rebounded since 2014 – 2015, the medium-high segment only started its recovery in 2016 and we can say it truly recovered in 2017," she told The Diplomat-Bucharest.

"Residential construction accelerated as the supply of new residential buildings did not keep up with the demand. The year 2017 brought changes to the market segments as a result of changes in buyers' behaviour along with an increase of their purchasing power. A significant percentage of house buyers is more interested in the benefits of the location, the construction's quality and its amenities than the house's price, regarding medium and especially medium-high segments. These are the buyers for which the quality of living is extremely important. The existence of this category triggered the residential premium segment's development, making the residential market more complex and attractive. Last year, we saw new investors entering the residential market with projects having different concepts. An example is Dan Sucu, the owner of Mobexpert group, who is developing Arcadia Apartments Domenii in Bucharest, a medium-high project with 800 apartments."

Looking at a bigger picture, Daniela Barbu said the same residential market's ascending trend also registered in the other countries of the CEE region in 2017: "There are several resemblances between our residential market and the others in the region: the growth in demand, the low supply of new residential constructions, a rapid development of new residential projects. These are combined with low interest rates for loans, higher wages and an economic growth."

In her opinion, the areas of the country where the residential market saw a successful evolution last year are the ones who registered a strong economic growth. "In Bucharest, being the most prosperous city of the country, the residential market has been growing rapidly, attracting more projects of big dimensions," said Barbu. "However, maybe a more spectacular evolution is that of the West region, especially Cluj. Cluj-Napoca, Brasov, Arad, Oradea, Timisoara, Baia Mare are cities with a huge development potential that experienced an increase in investment, in real estate projects, in demand and in house prices. The well-connected infrastructure - not only local, but at a European level (highway) - is a strong stimulator for this region."

In 2018, Conadi predicts more residential projects in the main cities of the country and in the satellite cities. "The premium segment will probably continue to develop in Bucharest and in the western cities and the high-end segment will start to rebound," said Barbu. "From our sources, there are already several premium projects to be launched in Bucharest this year. Another trend we expect to continue to see in 2018 is developing medium and large complexes. The most important stimulator could be a predictable economic environment, along with a stable fiscal framework. Of course, a high purchasing power and the macroeconomic environment also represent a strong stimulator. In order to continue sustaining the demand, optimal financing conditions for house buyers are required. The house loans accessibility has put the residential market on the rise in the past few years. Also, as we have seen in the case of Romania's Western region, a well-connected infrastructure is another powerful stimulator of the real estate market."

According to Barbu, the increase in demand, the economic and foreign investments growth and the rapid development on the office market are some of the factors that create a series of opportunities for the Romanian residential market in 2018. She explained: "As long as the global economic environment remains predictable and Romania has further economic growth, we will see a faster pace of new residential developments which will be absorbed rapidly. Therefore, the residential market will continue to be attractive for investors, as the yields stand at a very good level. Another opportunity, from our Development Division's point of view, is to deliver high-quality projects adapted to buyers' needs. At the same time, this is a challenge we have already experienced, and we are looking more in this direction.
Considering the political and fiscal changes Romania experienced in 2017, we believe the main challenge for the residential market in 2018 will be to adapt to new potential influencers."