CB RICHARD ELLIS

MarketView
Bucharest Residential Market
H1 2009

SALES

OFFER AND DEMAND

Quick Stats In the first half of 2009, trends that began in the autumn of 2008 continued to define
the residential market in Bucharest, as effective demand, sale prices and the
Change from
number of transactions closed in the stage of project or in the initial phases of
H1 08 H2 08 construction dramatically decreased. The supply of new residential units within the
Sale prices   residential compounds varies considerably, but many of them are not yet finalized
and are still awaiting buyers, who are postponing purchases for several reasons
No. of transactions   (the decrease of the volume of liquidity on the market, restricted access to loans,
increased unemployment, as well as the psychological pressure now affecting the
market according to which the prices of dwellings will keep on decreasing).

A possible come-back of the residential market in Romania could be aided by the

Hot topics social program “First Dwelling”, which was recently approved by the Government
through HG no 17/ 17 June 2009, with the purpose of facilitating access to
• In the middle of June, purchasing a dwelling through mortgage loans, with a maximum period of 30 years.
the state approved a The beneficiaries of this program can buy a completed dwelling, one under
social program called construction or one which is to be built in the following 18 months from the date of
“First Dwelling”, with the receiving the guarantee promise. The state guarantees the purchase of a dwelling
purpose of facilitating within the limit of € 60,000 for those who fulfill the following eligibility conditions:
access to purchasing a they did not own a property when the program become functional, they make a
dwelling through down payment of 5% of the dwelling’s purchase price, they agree not to sell the
mortgage loans. dwelling in the first five years after the date of acquiring it and they agree with a
rank I mortgage in the favor of state for the purchased dwelling.

• The “First Dwelling” According to the official data published by the Romanian National Statistics
Program will provide Institute, the stock of dwellings available at the end of 2008 was of 8,328.7
guarantees of thousand units, out of which 9.5% were located in Bucharest.
approximately €1 billion
for mortgage loans to the From 2002-2008 the national dwelling stock increased, with the most significant
persons who want to buy growth being registered in 2008, when 67,255 new units were finalized, out of which
their first dwelling. 4.5% in Bucharest and 10.6% in Ilfov County. 2008 saw 3,021 new units brought to
the stock of dwelling in Bucharest that were included in residential compounds, but
also privately built. Out of these, 58% were finalized in the 4th quarter of last year.
• Sales prices for new As one can notice in the graph below, in the last 3 years, the 4th quarter has been
residential units have the most active quarter for completions, while the 3rd quarter is much less active,
dropped by 15-40% in which corresponds to the summer period.
H1 2009 compared to
Dwellings completed in Bucharest, by quarter, between 2006-2008
H1 2008.
2006 2007 2008

2000
number dwellings completed

1600

1200

800

400

a
1st Qtr 2nd Qtr 3rd Qtr 4thQtr
Source: CB Richard Ellis

©2009, CB Richard Ellis, Inc.

 According to official data, from January – May 2009, Total mortgages for population, by district, May 2009
MarketView Bucharest Residential Market

19,117 construction authorizations for residential

buildings were issued, a decrease of 17.8%
compared to the same period in 2008. The most Bucharest
significant decrease was registered in the area Constanta
Bucuresti – Ilfov (- 1,301 authorizations). Cluj
Iasi
Timis
MORTGAGE MARKET Dolj
Brasov
Sibiu
According to the latest statistics from the BNR Prahova
(Romanian National Bank), in May 2009 the level of Mures
mortgage loans for the entire country increased to Galati
Bihor
22.227 billion RON, the equivalent of € 5.31 billion. Arges
In spite of these statistics, mortgage loans in Others
Romania faced slow changes caused by credit costs
and also by financing conditions. In May 2009, the 0% 10% 20% 30% 40% 50%
Capital registered the biggest percentage from the % of mortgage
total of the approved mortgage loans in Romania
with 42%. Even if BNR tries to encourage the
population to borrow money in the national currency,
the biggest percentage of approved mortgage loans
is still in foreign currencies: 92% for Romania and
96% for Bucharest.

PRICE LEVEL
Price level, € / built sq m + VAT 19%
In the first half of 2009, sale prices for new
residential units continued their downward trend,
with decreases varying between 15-40% compared
2008 H1 2009
to the same period of 2008, according to the
location, finishing and facilities, as well as to the
Aviatorilor – 3,500 – 4,500 3,000 – 4,000
developer’s sale strategy. At present, the sale prices
Kiseleff
expressed in euro are at the level of 2005, but prices
expressed in national currency did not register the Primaverii 3,500 – 4,500 2,500 – 4,000
same decrease due to the RON’s depreciation
against the euro of approximately 17% from Herastrau 2,800 – 4,500 2,200 – 3,500
September 2008 until June 2009. In the near future,
we estimate that sale prices for new residential units Dorobanti 3,200 – 4,000 2,000 – 2,500
will continue to decrease, due to demand with less
and less liquidity. Center 2,000 – 3,000 1,500 – 2,500

Real estate developers’ solutions for stimulating Floreasca 3,000 – 3,500 1,700 – 2,000
sales has consisted of offering material discounts
(parking places and/ or storage space for free) and Baneasa - Pipera 1,600 – 2,800 1,000 – 1,700
even discounts from the final sale price if a down
payment of 50, 75 or 95% is made or if someone Sisesti – Straulesti 1,800 – 2,800 1,000 – 1,300
purchases more units. An interesting solution offered
by some developers is represented by the possibility Corbeanca 900 – 1,400 800 – 1,000
of paying the rent for the purchased apartment, for a
maximum period of 4-5 years, during which time the Otopeni 1,100 – 1,500 700 – 1,000
economic and financial situation will improve and the
purchaser will be able to obtain credit to pay the
difference between the sale price and the total rent
paid until that moment.

The present economic recession in Romania, which

is mainly determined by the events at global level, is
in fact a necessary correction that needed to take
place. The real estate market could go through the
most difficult time in the recent history, but after
H1 2009

every decline a new comeback phase is expected,

and also a restart of the real estate market cycle.
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©2009, CB Richard Ellis, Inc.
 Demand, by the type of residential spaces LEASING

MarketView Bucharest Residential Market

100%
OFFER AND DEMAND
90%
The residential to let market registered foundational
80%
changes in the first half of 2009 compared to the
70%
% of demand

same period in 2009, including lower demand, at the

60%
Villas same time with an increase of supply, a fall in rents
50%
Apartments and fewer closed transactions.
40%
30% The newly finalized residential compounds or the
20% ones which are under construction were mainly built
10% for sale, but because of the significant decrease of
0% these transactions, several offers for sale have been
2005 2006 2007 2008 H1 2009 found on the market of residential spaces available
for rent.

In the first half of 2009 the changes from the market

in 2008 were continued, as apartments were mainly
rented (86% from the total rented units) as opposed
Demand, by number of bedrooms to villas (14% from the total rented units). The
demand for villas is still very high, but the number of
the offers is limited; besides, in the last years mostly
50% apartment compounds have been built, a fact that
45% has led potential tenants to turn their attention to
40%
those available units.
% of demand

35%
30% 2008 The most requested properties for rent in the first
25% H1 2009 half of 2009 were 2 bedroom apartments, which
20%
15%
represented approximately 40% of the total number
10%
of rented properties, compared to last year when 3
5% bedroom apartments were the most rented type of
0% apartment. The most likely explanation for this
1 Bedroom 2 Bedrooms 3 Bedrooms Villas (3,4,5 change is lower budgets offered to expats by
Bedrooms) multinationals and embassies to rent a work
dwelling.

The companies that rented most of the luxury

residential units in the first half of 2009 came from
the industrial and energetic production sector (75%),
Demand, by the companies business sectors
followed by natural persons who rented on their own
(11%), then by embassies and consulates (6%).
Within the Industry and Energy sector, the
companies in the car construction industry stood out,
80%
as they rented 50% of the total of rented luxury units
70%
in 2009. Demand from corporations has continued
60%
its descending trend from last year, which is a
% of demand

50% consequence of the reduction measures in regards

40% to the activity run in Romania, caused by the
30% international economic and financial crisis.
20%
10% The areas of interest for luxury rentals also
0% remained the same in the first part of 2009. The
Industry & Natural Ambasade Financial IT & C Consumer residential areas Primaverii, Herastrau, Dorobanti,
Energy persons si Services Services & Aviatorilor and Kiseleff are still at the top of the most
consulate Leisure wanted locations for the luxury class, and are also
supported by the high quality of the available offers
on the market in these areas.
H1 2009

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©2009, CB Richard Ellis, Inc.
MarketView Bucharest Residential Market

In the first half of 2009, the Domenii area stood out, Rent level in H1 2009 (%)
as active both on the supply segment (with
numerous villas, with average net areas of 250 –
300 sq m), and on the demand segment (due to the
small distance to the downtown and business
district). We continue to record a shortage in supply
for the classic villas in the city for which there is
potential demand (Downtown and Cotroceni area).
In the absence of offers for city villas, some tenants
turned their attention to the Baneasa-Pipera area,
where there is a diverse offer of new villas, with
much more generous net areas, but as the distance
to the centre of the city is too great and because of
poor accessibility and consistent traffic jams,
demand for this location significantly decreased.
New areas of interest like Stefan cel Mare, Tei,
Straulesti have been developed because many
apartment compounds and single developments of
apartment buildings for middle and middle-high
segment were completed. Lower budgets received
by the expats for rentals of work dwellings also
supported demand for space in these areas, with Rent level for 2 bedroom – apartments (€/ month)

some expats being forced to renegotiate rents or to

move to a smaller dwelling or in semi-central areas.
Offers that benefit from a very good location and Location 2008 H1 2009
high quality finishing have been quickly rented, as
their number was limited. An offer can typically be Primaverii 2,200 – 3,000 2,000 – 2,500
on the market for a minimum of two weeks but up to
six months, in situations where the quoted rent does
Herastrau 2,000 – 2,800 1,500 – 2,200
not correspond to market levels.
Aviatorilor 2,300 – 3,000 1,500 – 2,000
RENT LEVEL
Dorobanti 2,300 – 3,000 1,500 – 2,000
In the period January-June 2009, rents decreased
by a percentage of between 10–20% for the Kiseleff 2,200 – 2,700 1,500 – 2,000
exclusive offer segment (penthouse, classic villas),
supported by the fact that the these offers are limited Floreasca 2,000 – 2,500 1,400 – 1,700
in number and location. Meanwhile, rents for
apartments with 1-3 bedrooms have registered a Center 1,300 – 1,800 1,200 – 1,700
stronger reduction of 20-30%, because of the
abundance of this kind of offers. Rents differ Domenii 1,600 – 2,000 1,200 – 1,700
depending on location, number of bedrooms,
finishing and offered facilities, whether the Baneasa – Pipera 1,800 – 2,000 1,000 – 1,300
apartment is furnished or not, the number of parking
places, the renting period, the down payment
amount, as well as the proximity to parks, green
spaces, kindergartens, schools, commercial and
leisure spaces.
Approximately 75-80% of existing properties on the
luxury renting markets in H1 2009, have been rented
for values of up to 3,000 €/ month, compared to the
similar period of last year when 75% from the
existing offers were rented for values between 2,000
– 5,000 €/ month.
Compared to the previous years, we notice an
increase of the negotiation range (up to 30%)
between the requested rent and the actual rent
transacted.

In the future, we expect further downward movement

H1 2009

of rents, until supply and demand are better

balanced.
Page 4
©2009, CB Richard Ellis, Inc.
a
 For more information regarding the MarketView, please contact:

MarketView Bucharest Residential Market

Radu Lucianu
Managing Director Romania,
CB Richard Ellis│Eurisko
Europe House
51-53 Lascar Catargiu Blvd.
Sector 1, Bucuresti
t: +40 21 313.10.20
e: radu.lucianu@cbre.com

Adrian Nicolescu
Manager Valuation & Advisory Department
CB Richard Ellis│Eurisko
Europe House
51-53 Lascar Catargiu Blvd.
Sector 1, Bucuresti
t: +40 21 313.10.20
e: adrian.nicolescu@cbre.com

Disclaimer 2009 CB Richard Ellis

Information herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and
make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any
projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the
market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written
permission of CB Richard Ellis.
© Copyright 2009 CB Richard Ellis
H1 2009
H1 2009

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©2009, CB Richard Ellis, Inc.