By accepting you will be accessing a service provided by a third-party external to https://az-imobiliare.ro/
Didier Balcaen, Speedwell: "About 60 to 70% of clients buy apartments with their own means, without the need for mortgage loans"
Mr. Didier Balcaen, how much have you invested in Romania so far?
Since people like numbers, we currently have approximately 90 MIO euro equity invested in Romania, representing roughly 350 MIO euro in project value. Our goal is to at least double that in the next 5 years.
What would you change about new projects? What would you come up with in addition to previous projects?
Our focus has always been on TOD (Transit Oriented Development), meaning bringing all functions of human life within close distance, working, housing and retail/leisure. Record Park, our mixed-use project in Cluj-Napoca, is the best example for that philosophy being turned into reality. The current crisis puts this principle to the forefront, but since it was at the basis of our projects, no changes are envisaged.
We are adapting to the new reality of the office market though, by offering more flexible conditions to tenants, who have learned that they do not want to get stuck with landlords that do not stand by them in difficult times for another 5 to 7 years.Our existing tenants can confirm our partnership approach.
On a personal level, I would like to step up the implementation of PropTech in our projects, mainly in the residential segment there is some catching up to do. Unfortunately, the pricing in the middle segment of the market does not allow for too much flexibility here.
What do you consider to be the main success factors in your project / projects and how do you differentiate yourself from other players in the real estate market?
First of all, we do not start from getting as many built m2 packed on a plot of land.We start (even before buying the land) from a concept design that we believe brings quality and implements the principles of TOD, as stated above.Maintaining the quota of green spaces and removing car traffic to the maximum are important guidelines therein.
I could extend with BREEAM certifications, etc. and efficient layouts, but our main focus and still the main frustrations with most clients, is the way the developer treats them, and that is where we aim to make the difference.
Many residential buyers make the transaction of their lifetime when purchasing their home in our projects, but also tenants get into very long-term contractual commitments for huge amounts.Neither of them wishes to be treated as a number in a business plan for the sole purpose of generating maximum profit for the developer.Hence, we aim to treat our clients with the respect they deserve, open communication, fair conditions and above all, a quality product.My main role in the organization is to encourage this behavior throughout our team, from the designers creating a quality space, the project managers looking at the smallest detail as if they would live there, up to the property management taking care of any issues (because no one is perfect), all in an open but decisive manner.
What projects do you currently have under development? Where are they located and how many units will they cover in total?
We have a land development in Râmnicu Vâlcea, where we are pre-developing the land and selling it to local developers, for a potential of up to 50 houses, 1.100 apartments and supporting retail.
We are currently finalizing our mixed-use project, Record Park, in Cluj-Napoca, which adds 236 residential units to the market as well as 14.000m2 of commercial (mainly office) space.
At the same time, we are also delivering the first 66 apartments of our TRIAMA Residence project in Bucharest.Commercialization of the next phase of 69 units has already started, with the final 69 in phase 3 scheduled to be delivered by end of 2022.
Also, in Bucharest we have our MIRO office and The Ivy residential project, combined as a mixed-use set-up. Miro's 23.000m2 rentable area is 60% pre-leased to date and will be delivered at the end of 2021. The Ivy covers over 800 residential units and amenities, of which the first building of 152 units will start construction end of this year.
Paltim, our mixed-use project in Timișoara, is finalizing PUZ stage and will deliver 15.000m2 of A-class offices, approximately 300 residential units and a historical villa in a fantastic central location of the city.
What are the most requested types of housing and what are the main sources of financing for purchases?
Although the current crisis has increased demand for houses, compared to apartments, in our target, being inner-city, the vast majority of demand will always remain for apartments.
Larger surfaces are, of course, searched for in lockdown times, however not always in line with financial possibilities. As a standard, we do aim to give maximum efficiency (the way every m2 is used is more important than the m2 as such) and offer large terraces, which are highly appreciated and sought after.
Being in a safe and green environment is also a strong request, which all our project comply with.
On the financing side, the Romanian market is very healthy and has very low leverage on the buyer's side. About 60 to 70% of our clients buy with their own means, without the need for mortgage loans.
What should be the main criteria that someone who wants to buy a home should look at?
Cliché of course, but the location should be the starting point, taking into account where you work, where the kids go to school, what you want to do in the evening. You do not want to spend half your life standing in traffic.
Secondly, set a realistic budget and search within that budget in order to manage your own expectations.
In the end, be critical and look for actual quality, since this is a huge investment for a long time. Check the layout, check what kind of insulation is being used (rockwool versus Styrofoam for instance), check the window profiles and technical equipment. What may look attractive when you buy, may lead to big headaches years down the road, so do compare in detail, we want nothing more.
Last but not least, also look into the management of the residential property, in this segment this is often taken care of by an unprofessional ownership association, while a professionally managed compound can add value to your property instead of costing you.That is why we also manage our own residential development through Proximus Properties, our own management company.
Do you keep apartments in the company's portfolio for rent?
I am a strong believer that the built – to – rent market has potential, even in a country such as Romania with high ownership.
To date, in very limited numbers only, although I am a strong believer that the built-to-rent market has potential, even in a country such as Romania with high ownership.Unfortunately, banks are not willing to provide construction loans for such products yet, hence we are in the process of creating our own financial structure to do so... more news coming.
What are the advantages that Romania offers to investors?
Romania does not offer higher returns than other countries, to the contrary, it requires rather high equity injections, since leverage is limited. That, however, means the market is financially very healthy since both developers and buyers are not overleveraged, the usual start of a bubble.
On the macroeconomic level, Romanians are moving ahead in life with fast growing wages, while many still live in old blocks not adjusted to modern living conditions, hence there is still a huge primary market to satisfy, giving long-term stability to investors, COVID just being a pause in the process but not changing any of the essentials.
How do you estimate the real estate market will evolve next year? What about apartment prices?
Caution will probably be determining the market for another year to come, which is understandable and proper. On the other hand, people will understand that investing in a decent apartment or house may be the best investment they will ever make, yielding an interest while offering a nice place to live at the same time. On the pricing side, all finished projects or close to completion have been built at quickly rising construction prices, so there is no room for price decreases, hence flat prices to cater for the cautious approach is my bet.In the long term, further differentiation between good projects (see all of the above) and others will occur, and people will understand why it is a good decision to pay for a good product. Only the ones that cut corners and only look at maximizing m2 will be forced to use the pricing as their only means to still attract buyers.