Tuesday, February 10, 2009

Large number of Romania's real estate projects postponed due to economic crisis

Some 120 real estate projects have been postponed or cancelled in Romania in the last three months because of the global economic crisis, a local survey revealed on Tuesday.

As many as 50,000 apartments, seven shopping centers and a number of office buildings were put on hold or cancelled, according to the survey conducted by a local newspaper, the Financial Daily.

These projects are worth at least 10 billion euros (13 billion U.S. dollars), the survey said.

But experts expect the number of projects that developers are shelving is much higher, considering the biggest players in the real estate sector have in recent years built up portfolios of hundreds of hectares of land in and outside Bucharest, which are now frozen.

"On the domestic market, we have second-tier developers, with weaker reputations, who have been trying to speculate on the shortage of commercial space, they threw themselves headfirst to buy land. They were not expecting this crisis which seems to be hurting us more than other states in the region because it proves we don't have enough domestic capital," said Razvan Gheorghe, CEO of Cushman & Wakefield Activ Consulting, a real estate consultancy.

While the biggest number of delayed projects has been in the housing market, some developers are happy as they did not start construction work last year.


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