January vs. December Bucharest Residential Property Prices Inch Down

After a troubled year 2008, the BREI - the real estate index calculated by Colliers International for Bucharest residential property - has shyly stepped into the year 2009. The index decreased by 2% in January compared to December and closed at 1,506 EUR/sq.m., down by 34 EUR/sq.m. compared to end-December 2008. According to a press release to BURSA, the decline is not significant, being rather the result of a predictable market idleness specific to the respective month of the year. The BREI started 2009 under the sign of last year"s turmoil and the uncertainties that dominate all sectors of the economy, Colliers International noted.

Regarding the components of the BREI, the BREI-V (the index for old apartments) declined by 3% at the overall level and increased by 7% in Sector 1 for the first time since July 2008. The BREI-V for the other sectors of Bucharest decreased between 2% and 6%. According to Colliers, the decline can be attributed to a constant rental market for luxury apartments in the northern part of Bucharest, as well as to the general perception that apartments in downtown Bucharest are a safe long-term investment. The BREI-V for Sector 6 continues to be the lowest, with 1,111 EUR/sq.m., while the BREI-V for Sector 1 continues to be the highest, with 1,990 EUR/sq.m.

The BREI-N (the index for newly built apartments) remained relatively constant compared to the end of 2008. The quarterly audit of the projects included in the index generated a few changes as a result of the postponement of delivery deadlines or the completion of the sales campaign. The BREI-N closed at 1,778 EUR/sq.m. at the end of January, down by 1% compared to December 2008.

The second half of 2008 brought five decreases in the value of the BREI, while July 2008 was the last month when prices asked by the sellers remained still. The value for each of the following months was lower than that of the month before. Colliers reported a BREI of 1,844 EUR/sq.m. at the end of July and of 1,540 EUR/sq.m. at the end of December 2008. The overall decline for the second half of 2008 is 304 EUR/sq.m. or 16%. The BREI for December 2008 was by 286 EUR/sq.m. smaller than in January 2008.