11th May
2007
Cashing in on Romanian real estate
I quit!” This is what David Flusberg told his American employer when his
friend and co-founder of Adama, Dvir Cohen, told him to come to Romania and start
a new business.
“I got into a plane for a two-week vacation, where we ran around cities,
met with brokers and learned about the market,” he says. After leaving his
job, Flusberg started a company with his partner in a Communist block on Calea
Dorobanti, in June 2004.
Just over 18 months later, the firm sold a quarter of the shares to Austrian investment
fund Immoeast for 60 million Euro.
“The firm was me and Dvir in a four room apartment,” he adds. “I
had one bedroom, he had the other, the living room was the office and we used
to stay up every night talking about business until four o’clock in the
morning. In a few months we decided to get a secretary and a driver because we
thought we deserved it.”
After raising a couple of millions from friends and putting in some of their own
money, the two men closed real estate deals. The first acquisitions were a small
building in Dorobanti which was renovated, a plot of land in Sos Nordului for
luxury apartments and a property in Strada Iancu Nicolae, which will be the site
of the new Adama centre.
“During that time we were learning about the market, meeting with banks
and brokers, getting our hands dirty and I was spending a lot of time going back
to New York pitching Romania to bigger investors,” says Flusberg.
For Adama, the middle class residential market was the most interesting.
“We saw that everyone was building these luxury apartments in Nordului and
some houses in Baneasa, but you had the masses living in really old buildings,”
he adds. “Construction stopped for decades after Ceausescu died and we decided
to buy land because we thought it was going to go up in value.”
Using the example of Poland, Czech Republic and Hungary, Adama became a bridge
between the market in Romania and investors in USA and Europe.
“They are looking for opportunities desperately,” he says. “They
have too much money and they don’t know what the hell to do with it. But
they are missing people who they can trust and communicate with. They don’t
feel comfortable going to foreign countries and we had the background to get them
to believe in us.”
At the beginning Adama did not attract large investors, but a crucial moments
in the firm’s development was meeting with a representative of US investment
fund Tiger Global.
“We sat down with him and the first question he asked was: ‘How quickly
can you invest 50 million Euro?’ We talked about the opportunities and a
few months later, after a lot of negotiations we closed a deal in December 2005.”
Because of the increasing competition and land prices, more than half of the company’s
activity in Romania is focused on secondary cities in the country with more than
150,000 inhabitants.
In Iasi, Adama is building a residential project near the University, of 160 apartments,
which is 20 per cent sold and plans a 600-apartment project in Bacau.
“If you take a city with 200,000 people, all of them living in old blocks
and you build 600 apartments with recreation facilities, swimming pool and parkings
with 800 to 900 Euro per sqm over the next four years, you will sell them,”
says Flusberg. “Romania is considered a poor country but everyone who lives
here can tell you that is not exactly true.”
Adama recently sold 25 per cent of its shares to Austrian investment fund Immoeast
in a transaction worth 60 million Euro. Flusberg says two other major international
financial institutions were also interested in the acquisition. Most of the investment
was in the form of a capital increase. Resources generated by the increase will
help Adama expand into new markets, such as Ukraine, Moldova, ex-Yugoslavia and
Turkey, but keeping an HQ in Bucharest. “In Kiev the official income is
lower to that of Romania per capita and they are building now almost 200,000 apartments
in monstrous blocks with 20 floors in the worst areas at prices of 2,000 Euro
per sqm,” he says.
The Ukrainian upper market is seeing prices of 10,000 Euro per sqm.
“In Moldova there is a lot of construction,” he adds. “Half
of the male population is working abroad so money is flowing in. City centre land
costs 200 to 300 Euro per sqm, where in Bucharest the prices are ten times higher
and the apartments are selling at almost the same prices as in Romania.”
While naysayers point to a potential correction on the real estate market, Flusberg
says Romania is still undervalued because of the lack of residential supply. However,
he believes the easiest way to lose money in real estate deals in Romania is through
speculating.
“But it is also the easiest way to win,” he adds. “It is like
a casino.”
Source: The Diplomat
Romanian real estate market – a business for
the foreign investors
The real estate market has significantly grown in the last two years, believe
the foreign investors in Romania. Even if the effects of the integration with
the European Union are not immediately felt, the real estate market has become
increasingly attractive for foreigners. Alejandro Solano Gallego, general manager
of Hercesa branch in Romania, considers that our country needs foreign investments
in order to develop.
Presently, Hercesa prepares the residential complex Basarabia, which will be ready
by mid-June, and the rehabilitation of Cismigiu hotel, which will preserve its
initial façade. “All the city needs to be rehabilitated,” confessed
Alejandro Solano Gallego, who added that the changes can be already seen, starting
with the rehabilitation of the historical centre of the city. Hercesa invested,
apart from Spain, in Portugal, Morocco and Bulgaria, but the differences are not
important, states Solano. “All the countries that we choose are friends
of the investors.
Once you get acquainted with the reality of that country, the administrative norms
and rules, the fiscal structure, things go on well,” said Solano. “Two
years ago, the market was reduced, the purchasing power was small. In the meantime,
the salaries have risen, the people are better prepared from the financial point
of view, the mortgage market has developed, now it is easier to borrow money.
All these have conducted to a bigger interest of the potential clients,”
stated Solano. Actually, Hercesa does not rule out the expansion to other cities
from Romania, such as Timisoara, Brasov, Constanta or Cluj.
If the Spanish market is mature, in Romania the market has not yet reached its
acme, offering many opportunities to the foreign investors. A condition for the
faster development of Romania is the capacity of absorption of the structural
funds. “You need the capacity to present a bigger number of projects. Without
projects there is no money. A good example for the absorption of funds is Spain,
which managed to absorb almost 99 per cent of the funds granted by EU, while Portugal
could not take advantage of them. And the differences between the two countries
are visible,” added Alejandro Solano.
Source: Nine O'Clock
European Investment Bank opens office in Bucharest
The European Investment Bank officially opens its office in Bucharest on June
7, officials for the institution confirmed for HotNews. As of that date, preparations
for the new European programmes addressing the infrastructure and small and medium
enterprise sectors will enter the finish line. The more substantial involvement
of the EIB in Romania was agreed late last year, with the signature of a memorandum
under which the institution will finance projects in Romania up to EUR 1 bln per
year. The opening of the Bucharest office of the European Investment Bank is the
key element for the launch of two European programmes: JASPERS (Joint Assistance
in Supporting Projects in European Regions), which will provide assistance in
large-scale infrastructure projects, and JEREMIE (Joint European Resources for
Micro to Medium Enterprises), which involves financing schemes for the SME sector.
The press bureau of the European Investment Bank announced that details on the
operation of the new office are generally settled, the personnel has already been
interviewed and only the director for Romania of the JASPERS programme is still
to be appointed. Further details on the JEREMIE programme will be soon provided
by the European Investment Fund, which is directly in charge with the programme.
Attending the official opening on June 7 will be the EIB chairman or deputy chairman,
a senior European official and an official for the European Bank for Reconstruction
and Development.
The RON 300 M bond issue launched by the European Investment Bank (EIB) in the
Romanian capital market was primarily underwritten by institutional investors,
13 per cent of which are non-resident entities, EIB and ABM Amro announced Thursday.
The issue was underwritten by banks (64 per cent), insurance companies (29 per
cent), corporations (5 per cent) and investment fund and investment management
companies (approx. 1.5 per cent), says in a news release Claudia Butacu, executive
manager of ABN Amro Securities Romania, the brokerage company for the bond issue.
ABN Amro Bank Romania acted as financial adviser, distribution group and payment
agent.
The public offer was carried out in April 26 – May 4, and was over underwritten,
which is why EIB decided to raise the offer from RON 150 M to the maximum value,
RON 300 M. Bonds have a seven-year maturity (to May 10, 2014). The interest, paid
on an annual basis, is seven per cent, and the yield is 6.95 per cent. Bonds were
put in the market for a price slightly higher than the face value, namely RON
100.25 as against RON 100.The bond loan will be repaid on maturity date, and bonds
will be listed with the Bucharest Stock Exchange, which has already agreed in
principle with the listing.
Source: Nine O'Clock
Information & Links
romania news
romania news
romania news rss feed
romania news
romania news rss feed
romania news
romania news rss feed
romania news
romania news rss feed
romania news
romania news rss feed
romania news
romania news rss feed
Romania property news
Romania property news
Romania property news
Romania property investment
Romania property investment news property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property romania
property for sale bucharest
property for sale bucharest
property for sale bucharest
property for sale bucharest
romania property investment
romania property investment
romania property investment
romania property investment
romania property investment
Property Romania
Property Romania
Property Romania
Property
Romania
Property
Romania
Property Romania
Property Romania
Property Romania
Property
Investment Romania
Property
Investment Romania
Property
investment Romania
Bucharest property
Off plan property
Romania
Off plan property
Romania
Property for sale Romania
Rss feed romania news.