City Report Bucharest, mid year 2009 - Land market
by BNP Paribas
The worsening economic crisis reflecting in the decline of all real estate segments led to the strong contraction of the land market. Despite the obvious price decline and growing supply, the number of land transactions decreased significantly, major deals being virtually non-existent. The supply had a balanced geographical dispersion, with differences regarding the size, urban planning, infrastructure and available utilities.
In ciuda dificultatilor cu care s-au confruntat dezvoltatorii, oferta nu a fost completata in mod semnificativ cu proprietati de tip «distressed», mai ales ca activitatea de marketing pentru aceste proprietati se desfasoara mai putin evident, iar institutiile financiare au evitat aparitia unor astfel de situatii.
The active demand targeted exclusively the plots with high development potential, located in good areas and resulting from the granted urban planning. Potential buyers focused on small and medium-sized areas that do not imply major risks and financial efforts. The demand came from equity opportunistic investors who tried to take advantage of a low liquidity market.
Even in the context of diminishing asking prices there are still major discrepancies in price expectations between buyers and sellers. Except the landlords who are experiencing financial difficulties, the other owners are not willing to lower the price below a certain level. Both sellers and buyers had a cautious approach that severely limited the number of transactions. In the first half of the year the downward pressure on prices continued, the asking prices dropping with approximately 20-40% compared with the second semester of 2008. The contraction did not manifest homogeneously in all areas of the city, recording significant fluctuations according to location and the development potential of the plot.