Austrian Investors Still Bet On Bucharest Real Estate

05.27.2011 ZF English

The Austrian investors in Romanian real estate sector, which were the most dynamic buyers of local properties over the past ten years, are rather looking to consolidate their current portfolio than to launch new projects, although they say things are starting to improve in Romania as well.

The Austrians are particularly counting on a revival of Bucharest, seen as the sixth urban conglomerate in the EU.

Overall, the Austrian companies control almost one quarter of Bucharest modern office stock, namely around 400,000 square meters, as well as shopping centers in Bucuresti, Pitesti, Cluj, Baia Mare and Arad.

Immofinanz, the largest Austrian real estate investment company, currently has a portfolio worth around EUR900 million in Romania, making it also the largest foreign investor in Romanian real estate sector, but it only has one property under construction, Maritimo shopping center in Constanta, though the company owns plots of land with a total area of around 180 hectares.

Sparkassen Immobilien is a satisfied owner of Bucharest's Sun Plaza, a shopping center that was developed following a EUR200 million investment.

"We are satisfied with Sun Plaza owing to the location and rising sales and number of visitors, with these as the main indicators we are watching. The entire shopping center market has been hurt, so, through various campaigns, we also had to help tenants survive, generate sales and be able to pay rents," said Friedrich Wachernig, Sparkassen board member, attending the Real Vienna, a real estate and investment fair focused on Central & Eastern Europe.

The company also has a plot of land in Bucharest for the development of a 27,000-square meter office building.

CA Immo currently controls 100,000 square meters of offices in Bucharest and the first two buildings of Sema Parc. The company also owns plots of land in Bucharest for new office buildings.

"I believe we are very lucky to have a good office portfolio in Bucharest, with buildings located both in central and less central areas, so that we can offer potential clients various rents," says Robert Wolf, an asset manager with CA Immo.

One of the few office projects under construction in Bucharest is developed by another Austrian company, SAB Gruppe, on Magheru Boulevard, where an older building is being retrofitted. "Investments amount to EUR6 million and are both self-funded and paid for with a loan from Erste Bank," says Reinhard Schertler, managing director and a shareholder in S+B Gruppe, which also owns Pipera Business Tower in Bucharest.

S+B owns other plots in Romania, in Arad, Oradea, Satu Mare, Targu-Mures and Sibiu where it planned to develop shopping centers, but these projects are currently on hold, as Romania has become a secondary market for the company.

For CA Immo, instead, the Romanian market has become more important after the acquisition of former rival Europolis last year and the company's representatives are talking about the first signs of a recovery. "After Europolis acquisition, Romania is a highly important market for us, one of the top three outside Austria."

Sparkassen representatives also see Bucharest as a key market for the company. "Bucharest is the sixth urban conglomerate in the EU after Paris, London, Berlin, Madrid and Warsaw, so that it is still a hot spot for us," Wachernig says.

Even though S+B sees Romania as a secondary market, the company's representatives say they are happy they have not panicked in recent years and that "small steps are being taken in the right direction".

"The market is going back to normal, it is no longer a lottery or casino, as it used to be several years ago, and I hope 2012 will be a year with normal prices," Schertler concludes.