Friday, June 22, 2007

FT: Awaiting its makeover

By Christopher CondonThu Jun 21, 10:22 PM ET

In a city known for its ghastly architecture, choking traffic and unrelenting bustle, Bucharest hides an unpolished gem right in the heart of its downtown. The area is rich in history, oozing an atmosphere that is equal parts neglect and new life. Yet it also seems cursed. While property prices and development have soared across the rest of Romania's capital, this most promising of quarters remains best known for what it could be.

"Potential? There is no discussion about it," says Jerry van Schaik, a Dutch businessman who runs a small hotel, a furniture shop and a bar in Bucharest's Lipscani neighbourhood. "But they have to renovate it and do it with style."

Lipscani is a jumble of streets in the city centre first settled in the 16th century. It lies just north of a vast stretch of the capital levelled by Nicolae Ceausescu, the Communist dictator, and built up with drab apartment blocks, office buildings and the infamous People's Palace. Luckily for Lipscani, Ceausescu simply let it rot and so it survived. The area is decrepit but it has all the ingredients necessary for a signature urban quarter. With its graceful architecture and narrow lanes, it can easily be imagined as a tourist magnet capable of redefining Bucharest's dismal image.

Instead, despite the economic boom that surrounds it - Romania's economy grew 8 per cent last year on the back of EU9bn in foreign investment - Lipscani is a mess. The cobble-stoned streets are pocked with sizeable craters that become dangerous after nightfall because few of the streets are well lit. Basic infrastructure, from water pipes to power lines, badly needs upgrading. Most of the 300 buildings in the neighbourhood lie in a serious state of disrepair. Many are vacant or occupied by poor squatters to whom the city has offered no alternative housing.

The mess is more than physical. Because of restitution claims from families that lost property under Romania's fascist and Communist regimes, ownership rights remain unclear for about 35 per cent of the buildings, according to the city. And, most controversial to businesses and others who want the area revived, city hall has stumbled in implementing a comprehensive plan to redevelop Lipscani. The city did ban vehicle traffic from the neighbourhood in early 2005. But because no other progress has been made, the severity of the ban has only served to damage the local economy.

"This is a microcosm of Romania," grumbles Van Schaik, who heads a group of entrepreneurs that has lobbied city hall on the project for more than two years, "full of business opportunities and incompetent people who won't let it happen."

That a Dutch businessman should be a leading figure in the Lipscani story is somehow appropriate. Beginning in the 16th century, after Mircea Ciobanul, prince of Wallachia, built a royal palace near the banks of the Dombovita River, the area has attracted foreign entrepreneurs. Craftsmen and traders flocked here from Germany, Austria, Greece and Turkey. Today, the street names recall some of the early guilds and professions that occupied the neighbourhood: Selari (saddlers), Covaci (blacksmiths), Sepcari (hatters), Blanari (furriers), Bacani (grocers) and Zarafi (money changers). Lipscani itself is the name of one of the main streets running through the area and means Leipzig, referring to merchants who brought goods from the German city.

Aside from fragments or reconstructions, nearly all of the medieval structures are gone. The oldest extant buildings now date to the 18th century and include Stavropoleos church and Manuc's Inn, a guest house for travelling merchants. The vast majority of buildings, however, were erected in the 19th and early 20th centuries.

According to Adrian Majuru, a Bucharest historian, commerce in the neighbourhood gradually diversified from the basic crafts. By the 19th century and right up until the first world war, Lipscani was known for its luxury goods shops and banks. The British-Romanian Bank operated on Smardan Street. On Selari Street sat the Concordia Hotel, a once prestigious address where, in 1859, the heads of Romania's political parties elected Alexandru Ioan Cuza prince of Moldova and Wallachia, uniting these principalities to create the Romanian national state.

The city says it has big plans to bring Lipscani back to life with funding from the European Bank for Reconstruction and Development, the United Nations Development Programme and its own budget. Beginning with Smardan, Selari and Lipscani streets, the neighbourhood will have its basic infrastructure completely renewed. Street surfaces will be redone and small parks, benches and fountains added. The city will also renovate a number of buildings it owns in the quarter, beginning with 12 prominent houses, and, say officials, force private owners to follow suit or sell. By April 2008, says Catalin Cazacu, the city's chief architect, Lipscani will be reborn.

But officials have been making such promises for at least two years. In January 2005, a representative from the office of urban planning said the new infrastructure would be completed by April 2006. A year past that date, very little work has been done. Cazacu insists no such target was ever in place and he chastises the local business community for being impatient.

"[They should] be more flexible and more interested to understand the complexity of the project," he says.

Cazacu makes a fair point that the plans for Lipscani are ambitious and complex. They require a lumbering and inexperienced bureaucracy to co-ordinate several utility companies and government agencies along with developers, builders and archaeologists eager to study every turn of earth.

Yet there is hardly a hint of progress. Diggers broke ground at the foot of Smardan Street last October but abandoned the site when an 18th-century foundation was discovered just below street level. It remained exposed for months, though archaeologists could have quickly completed their examination of the ruins and allowed work to continue. More recently, work began on a small portion of Lipscani Street but it is progressing very slowly. Making matters worse for local residents and businesses, by nearly everyone's account the city has behaved abysmally at communicating its decisions and plans.

With little work under way and less information available, investment into the Lipscani neighbourhood has moved slowly. "Sooner or later, this area is going to turn to gold," says Andre Sandu, director of Media City, a property agency. But "it could be in two years or 10 years. Nobody knows when."

Price ranges vary according to different agents, though all agree that they have at least doubled over the past two years. Sandu says average closing prices are now EU1,500-EU1,700 per sq metre, but asking prices can top EU5,000 per sq metre. Colliers International, the property agency, says prices are much higher, more in line with or even exceeding prices for new apartment units outside Lipscani. Monica Barbu, head of the company's retail division in Bucharest, says closing prices in Lipscani now top EU4,000 per sq metre on the back of a recent surge in demand.

Agents say both local and foreign buyers have picked up buildings one at a time - but carefully. According to Barbu, non-Romanian investment funds have been active in the neighbourhood as well as individuals, especially from Greece and Spain.

Few are investing in serious renovation, however. Rents remain low and there is no demand for individual apartments. Potential single-unit buyers are, agents say, discouraged by the run-down condition of the neighbourhood and the lack of access by car. So owners sit on their hands. New businesses are moving in but they tend to be bars and caf├ęs; these add some zest but could prove transient.

While investors fret, local residents are even more anxious. In the old Concordia hotel, now a run-down apartment house, a filthy, shaggy dog sleeps on the first floor landing outside the room where Cuza united Romania. Residents emerge, sheepishly at first, from their apartments but then readily vent their frustration at city hall. Conditions are typical for the neighbourhood. They have no gas and no hot water. They use butane tanks to cook and heat their small flats. (The large suites were long ago broken up with thin partition walls.) The residents are technically squatters, though they only stopped paying rent because the owner stopped making repairs. With all the talk of the neighbourhood being renewed, they live in fear that they will be tossed on to the street any day now.

"The city has never told us anything," says Lenuta Patrascu, 48, who has lived in the old Concordia for 30 years. "We only know what we read in the papers."

Other residents and business owners say much the same. Eduard Tanase, has owned Unistrade, an antiques shop, on Lipscani Street since 1990 and has worked in the neighbourhood for 37 years. Since the area was closed to traffic he says his sales have dropped 60 per cent. He thinks he will survive because he is nearly finished paying off a bank loan but "a lot of other businesses are in a desperate situation".

The neighbourhood is awash with rumours that officials are deliberately holding back the redevelopment plan until city hall cronies can buy up a substantial number of properties. Then the project will burst forward. Cazacu dismisses the rumours as absurd and pledges that Lipscani will soon get its long-awaited makeover.

"You will see what happens," he says. "You will be amazed."

Local agents

Media City, tel: +40 21-310 0399;

Colliers International Bucharest, tel: +40 21-319-7777;

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