The real estate market does not reach the European standards

Impact was a partner in the event, organized by Ziarul Financiar, and called Capital market - challenges and opportunities. During the event, Dan Ioan Popp was one of the key-note speakers, and, during his presentation, analyzed important aspects of the Romanian real estate market, underlining the insufficient size of the local real estate market, compared to the European one.

The presentation focused on the following main issues:

• The high potential of the residential demand
• The residential offer, below the demand
• The low level of the real estate loans
• The convergence versus the residential market
• Foreign investors versus the BET evolution
• The financial indicators for banks and developers
• Construction/real estate versus the Stock Exchange

Dan Ioan Popp underlined the need for more houses on the Romanian real estate market, and warned that the average surface per house was, in Romania, below the European average, while the demand for new houses was 10 times higher than the offer. Also, the increase of the residential demand is supported by the performance recorded by the macroeconomic indicators, such as the increase of the salaries and the growth of the GDP/inhabitant.

"The Romanian real estate loan market is just starting out, being considerably below the European average, as the real estate loans represent only about 10% of the total deposits in the banking sector, and only 2.45% of the GDP", Dan Ioan Popp added.

By using a convergence model, Popp underlined that, in order to reach the European standards in terms of square meters built per inhabitant, about 100,000 homes should be delivered per year for 75 years, or 145,000 homes/year for 50 years, or 254,000 homes/year for 25 years. By comparison, only 45,000 homes were delivered last year on the Romanian market. Also, he underlined that Impact was developing many projects that supported, in terms of performance and quality, the goal of reaching the European standards.

Another underlined element was that the Romanian real estate market was more volatile than the developed markets, and, when the indexes of the more mature stock exchange markets, such as the New York and London market register descreases, such decreases were immediately followed by an even more accentuated decrease of the stock exchange indexes on the immature markets, such as those in Vienna and Bucharest. Also, it was pointed out that the BET index was influenced by the high volume of the sales made to foreign persons and institutions.

"The penalties inflicted on the stock market developers cannot be justified, considering that the real estate sector registered the best performance in Romania during the year 2007", Dan Ioan Popp concluded.