Land Price Plunges To Uncharted Depths

• Some owners cut prices by as much as 80%

The international financial crisis caused a nearly complete freeze of the Romanian real estate market starting in the last weeks of 2008. The sheer lack of liquidity experienced by investors and banks alike froze not only residential, but also land transactions. Representatives of Euroest, one of the leading land brokers in the Bucharest area, claim that the number of closed deals in the last months is close to nil.

"The number of important transactions closed in the Bucharest area since the beginning of 2009 is almost zero. In the absence of any reference for comparison, it is almost impossible to outline a sale price trend. If we refer to the prices asked by the sellers, 2009 has marked a major collapse, by as much as 20% to 50%. In some special cases, in the outskirts of Bucharest, the owners are ready to lower their price by as much as 80%," said Euroest Marketing Manager Titel Folea. In his opinion, the few investors who have liquidities are focusing on downtown property, which is less likely to suffer from a rapid and continuous depreciation. Office space will remain in demand, as the chances to secure a yield are much better. According to Folea, land in the outskirts of Bucharest is attractive only if it is close to major road intersections, where logistic and industrial developments are favoured.

Ionut Ciocan, a representative of the real estate agency DTZ Echinox, told BURSA that the land market had been frozen for several months. "The very big difference between the expectations of the sellers and the buyers, the lack of liquidities and the very high risk of freezing a large sum of money in a plot of land during restless times have caused a general freeze on the land market. Prices for land in Bucharest have decreased by 10-to-30%, depending on the specific part of the city. The downtown area has been less affected," Ciocan added.

Adrian Ghimpau, a manager with Coldwell Banker, concurs on the general opinion that the land market has been frozen for months. According to him, only a few insignificant transactions have been closed. For the time being, the lack of liquidities and price unpredictability are preventing any investments in land.

In turn, EuroMetropola reported sporadic sales of small plots between 500 and 1,000 square meters for private homes near Bucharest. EuroMetropola, too, confirmed that prices have decreased by 20-to-30% or even by as much as 50% in some particular cases. EuroMetropola believes that opportunists will come to play in 2009 and seek to buy very rare properties, which would have cost a fortune a year or two ago.