Land Prices In Bucharest To Stabilize

Land prices in Bucharest are, at the moment, similar to those in capitals of countries that acceeded the EU in 2004, but they have started to go down, according to DTZ Echinox consultant Daniel Mitarcu, quoted by Rompress.

"In the last two years, Bucharest has acknowledged a general increase in terms of land prices, from 50% to 400% depending on the facilities created in that particular area. Prices have gone up chiefly in the north area of the capital more than in the south. I believe that land prices can go up only for a short period of time and then are bound to stabilize. We do not expect a spectacular increase in prices", he added.

Land prices can be indirectly influenced by construction costs. At the same time, if Romania"s accession to the European Union in January 2007 boosts the buying volume so that the demand for real estate products will develop both in quantity and quality, real estate developers will be motivated and, implicitly, this will result in a more dynamic land market.

Land that is suitable for residential projects is available in all districts and it may be identified as free land or as land from unused industrial surface areas.

According to the DTZ Echinox representative, district 5 may offer the largest buildable surface area. From a commercial point of view, the most profitable residential developments are in district 1, mainly due to the higher selling price that can be obtained in this area. Districts 2 and 3 are among top districts as well, with five residential projects consisting of over 100 units. According to Mr. Mitarcu, the explanation may be the highest population density in these districts.

An important offer for developers consists of free land and land that is occupied by demolishable buildings that can be used for construction of new apartment buildings. Such situations are encounterd in cities like Cluj, Timisoara, Iasi, Bacau, Suceava.

In south Bucharest, land has a wider price range, compared to the north. Also, around the southern city limits, there are larger land surfaces for sale than in the northern area of the city. Most transactions involving land in southern Bucharest are speculative.

Presently, the yield for an investment in the commercial segment - acquiring land and building a commercial cenre - is, according to DTZ, between 15 and 25%.

In big cities targeted by investors, the price of land suitable for hypermarkets reaches 200 EUR/sqm.