This headline popped up on the Mediafax wire this morning: One-third of 6,000 Bucharest apartments finished in 2009 still for sale. One-third? As anyone who has passed by any of these new developments will tell you, they look like ghost cities: almost empty. The idea that two-thirds have been sold strikes us as overly optimistic.
The figures (which we assume Mediafax got from the developers themselves) almost certainly include apartments bought off-plan, in bulk, by investors. The number of apartments in each development being lived in is, on average – we would estimate – under a third. Well under, in fact.
If you don’t believe us, drive past any of these developments at night, and see how many lights are one: Asmita Gardens (found on the corner of Mihai Bravu and Calea Vacaresti) looks especially other-worldly. Huge banners proclaim that ‘We are ready‘. They may well be, but who else is ready to pay the prices being asked?
Besides the simple fact that the developments were projected and costed during a housing boom, most of the developments are hampered by the size of the apartments in them: they are too big. At In City Residences, even the smallest one-bedroom apartments measure 88 square metres. That’s about the size of a three-bedroom apartment in an older block.
And then there are the balconies and terraces.
If you are paying €1000+ per square metre, then every square metre counts. So while on paper it might have been a great idea to incorporate 10 square metre balconies into a standard two-room apartment, in reality all the developers have done is add €10,000+ on to the price of the end product.
You have to feel at least a grain of sympathy for those people who did buy apartments in these new developments, when the market was in full flow and the future looked rosy; especially if they did so with mortgage loans. Some of these people are facing negative equity already; in some cases before they have even moved in.
And with the Bucharest real estate market set for another gruesome year (expect the price of housing to fall at least as much as last year), these empty tower blocks look doomed to a lonely existence for the time being.
{ 10 comments… read them below or add one }
How is real estate going in Romania now ? How much is a studio+bathroom priced in Bucharest or other main Romanian cities ?
Drove past the above development last night. Of seven blocks, four are yet to be lived in: they are totally dark and unused. The other three are – judging by the lights on – less than a third empty. So the crisis goes on. prices are cheap. A studio in a central area costs no more than €40,000, in less central areas much less.
whenever big investments are being made here especially by foreign groups – they’re almost always bad investments it’s like we are doomed
not only do they build ridiculously pricey buildings they also have started to build in all the wrong places including parks, the precious green space of polluted bucharest. I hope this will stop them no investment at all is better than a bad one it’s the lesser evil
at least these ones got finished! Planorama anyone? BANKRUPT! Four half built tower blocks and loads of people wanting money back
I had forgotten about Planorama. Yes, it is currently over two years late, the developer has gone bust and a few hundred people who bought apartments are not happy. Here is the story (Romanian only): http://www.evz.ro/articole/detalii-articol/873638/Falimentul-darama-cartierul-Planorama/
Wasted space. Waste of money. I’m sure that Bucharest isn’t the only Eastern-European capital to boast such stupid investments though. Meanwhile young people are doomed to always live in rented apartments with improper heating and in really dodgy neighborhoods. Fun all the way!
Bucharest is not alone. Juts one other example: I was in the Bulgarian ski resort of Bansko at New Year: the outskirts of the town are full of empty and half-finished developments.
Building only pricey accommodations will not stimulate the purchase of housing by new clients. It will only determine people to sell their old apartments and move into new ones or the apartments will be bought only as investments by the wealthy. So people who can’t afford to spend 80+ thousand euros will have to look for different solutions. You can imagine I’m only saying this because I’m upset about the opportunities students such as myself are missing out on
There, I’ve complained some more
Cheers!
I don’t understand how can anyone buy these apartments, except – as you said – for the very wealthy who can purchase them as 6-packs.
Because other people need to borrow money from the bank to do that. And how can anyone afford to borrow money from the bank on a 25 years period, considering an environment such as Romania?!?!
Things can change in Romania overnight, from employment to non-employment you can go in a few days. From various reasons: business owners who filled their tank and want to get away, international companies relocating, poor governmental policies, people getting ill because of poor health sector etc…
My opinion is that whoever had money for such appartments – they already bought with money down. The rest of people can either expect until 30000 Euro with 5% interest opportunities appear or buy now and hope nothing happens to them in the next 25 years. Kind of a long shot though…
I totally agree. I’ve made peace with the fact that soon I will be faced with tough decisions including where I will live. And this is a big one that seems to be invisible to the average Romanian youth. If you ask them what they would do with 50.000 euros the majority would respond: “Buy a 50.000 € car, of course!”. I sincerely like my country but I fear I shall be forced to move out because of how tough it can be for graduates here.