NEWS

The magnetic pole shift in the real estate industry – deprived of any major real estate projects until now, the South of Bucharest becomes the new leading target of real estate developers. Whether we are talking about residential quarters or shopping centers.

“A lot of investments were going North and the city shifted towards that area.... but we want to bring it back into position, to bring an equilibrium... and we are hoping we can do it, ” says Ionut Negoita, the person who, together with his brother Robert Negoita, linked his name to the building process of the largest hotel in Central and Eastern Europe, Rin Grand Hotel.

The VITAN CELL. Viewed by many as a real estate eccentricity, the four stars hotel with 1.500 rooms from the Vitan area, where the two brothers have made an investment of 60 million Euro, will be completely operational at the end of this year, at the present moment offering lodging in the 650 open rooms. Last week, the hotel lodged a part of the participants at the NATO Summit, only a week after the conference of the Ministries of Education from the European Union was held in the same place. An easy to understand choice: apart from the large lodging capacity, the hotel houses 36 conference halls – of which the largest one spreads over a 1000 square meters area, being by far the largest hall in Bucharest. Translated into sales figures, all these would mean an estimated business figure of 15 million years, estimates Ionut Negoita.

Pioneers in the real estate development in the South area of Bucharest, the Negoita brothers have also built a complex of 560 apartments in the vicinity of the giant hotel, and the last batch of these apartments is to be delivered during the month of August. The 7 Ha land the Rin Grand Hotel and residential quarter cover was bought two years earlier when a square meter was sold with 50 Euro. Now, the two brothers can only congratulate one another for the choice they have made as, according to what Ionut Negoita told us, the prices have gone ten times over. The same inspired move was to purchase another piece of land, measuring 52 ha, approximately 4 km away from the Rin Grand Hotel, where they have started to build a residential quarter of much larger dimensions – 1.680 apartments will be delivered next year as the construction on the structure has been completed in a proportion of 80%. It is important to mention that 400 of these apartments have already been contracted at a selling price of 1.100 Euro/ square meter, among the lowest prices in the country.

We are investing here. In the same area, the Negoita brothers want to develop a one single building type of project, with a built area of 140.000 square meters, meant for office spaces, but which will also include a mall with a renting spaces worth 20.000 square meters. In order to give a visual dimension to this project, Ionut Negoita relates it to the Rin Grand Hotel, where the built area is of 90.000 square meters, explaining that the total cost for this project could reach 160 million Euro.

Going from figures to business strategies behind the, Ionut Negoita says that he has decided to invest together with his brother in the Souther part of Bucharest not only because it is withing a relatively small distance from the center, but also because in this area there is a lot of “land where you can develop text book – like projects with no restrictions”. Moreover, Negoita explains, the area revolving RIN Grand Hotel needed to be developed, adding that “we want to develop a complex of activities, to have an core to work around and buld new projects like we did in the Baneasa Project”. In the same area of the Rin Grand – core, the Negoita brothers own a third piece of land, of 9.5 ha, where they plan to start a new residential project next year, offering approximately 3.000 aprtments. “We keep investing here, other will soon follow”, Ionut Negoita says in a firm voice, explaining that, at this moment all their financial resources are concentrated in this area.

Hyper Investments

The first of those others Negoita was talking about have already arrived. What a year before was the marginal part of Buchares has become the target of a lot of investors. The Carrefour chain of hypermarkets, for example, will be opening the sixth market in Bucharest, as a part of the Vitantis shopping park, which is almost next to the Rin Grand Hotel. “The South of Bucharest is an area where we still do not have a Carrefour market, it is a highly populated area and we need to be on the scene. The potential of the area is highly important given the fact that many real estate projects have been announced for the forth coming year.” Andreea Mihai explains, in her capacity as marketing manager of Coarrefour , as being one of the reasons for the approximately 12 million Euro investment made in the new unit covering an area of 4. 000 square meters.

Developed by the British investment fund Equest, the Vitantis project will be completed in the summer of this year and will have a rentble space of 37.000 square meters, including a shopping gallery with 85 shops. At this moment, the retail park is rented in a proportion of 75%, according to the real estate consultancy campaign Cushman& Wakefield, and among the anchors is Carrefour, the Bulgarian electronic retailer Technomarket and Praktiker – which was inaugurated in 2006, once the first phase of the project was finalized.

Mallima. The others could also mean a few shopping centers of large dimensions – at the moment, at the Southern part of Bucharest there is only one operational mall: City Mall. After several owner changes, City Mall is now owned by the Australians at APN/UKA Fund, which paid 103.4 million Euro to buy the mall. Developed by Euromall, City Mall was bought in 2004 by a trust formed of the elena Jaguar Development company and the Israeli Villar group, after a transaction of 20 million Euro. Later, the mall was sold to Victoria Holding, a Greek and British lead company which would later on sell it to the Australians at APN/UKA Fund. A series of transactions which have brought up a series of question marks at the time with relation to the success of a mall in such an underdeveloped area of Bucharest.

Now, for the next two years, the Southern area is engaged in various mall projects, somne of them being in development at the moment – it is important to state that the same City Mall was extended last year, following an investment of 13 million Euro, drawing the attention of brands like Billa and electronic retailer Domo.

As for the new projects in the South Market area, the Sun Plaza is under construction – with a retable space of 76.000 square meters – and the inauguration has been announced for the beginning of next year, with anchor names like Core, Baux Max and Moexpert.

An investment of over 100 million Euro, Sun Plaza is developed by EMCT in partnership with Sparkassen Immobilien.

Irish South. In the South, the Parklake Plaza is being built as well, the largest mall in the Capital, as the project developer states, the Irish company Caelum Development. Situated on an 8 ha land, the project will be functional in 2010, including, apart from a shopping center, business office spaces as well. As a total, the investment will be of about 600 million Euro, the first of the investments the company makes in Romania. The rationalizing the Irish have made? “The shopping center industry in Romania is underdeveloped. There are only 80 square meters of space for 1000 inhabitants in Bucharest, while in Budapest the number is 5 times higher” said Thomas James Kearns, CEO Caelum development a few months ago in an interview with Money Express.

According to sources in the industry, Caelum development is currently in negotiations with the Portuguese at Sonae Sierra Morgadinho, Expansion Manager of Sonae Sierra, has not confirmed nor denied the possibility of a transation, stating that “we would like to buy Parklake Plaza, as we would aslo like to acquire other malls in Bucharest”. For the time being Sonae Sierra, which holds 47 malls in Europe and South America, has only made an acquisition in Romania, the River Plaza mall in Ramnicu Valcea, but, Mogrgadinho says, the Sonae Sierra strategy is to purchase lands where to develop projects on their own. Until now the Portuguese have bought two pieces of land, one in Ploiesti and another one in Craiova, where they plan to build two malls, for a total investment of 300 million Euro. At the same time Sonae Sierra is in the final phase for the acquisition of a 50% package of the Arena Mall Bacau, where they are also in charge of the management of the center. But Bucharest remains a priority.