Excessive land prices block deals

Architect Lucian Parvulescu, who earlier this year became country manager of Austria’s Premiumred, the real estate arm of Volksbank group, will launch his own development plans, after former Premiumred managers have already started two real estate projects in the Piata Victoriei area.
Premiumred has an annual investment budget of over 1bn euros, divided among 13 countries, with each regional manager fighting to attract as much of this sum as possible in the country he represents, reads the April 24 edition of Business Construct monthly.
However, one of the biggest obstacles the company faces domestically is the high cost of land.
“Land is far too expensive, a reason why I believe many deals have been blocked,” says Parvulescu, who considers the price of constructions in Romania is also above the level of other CEE states.
Premiumred’s main objectives on the domestic market are investments in retail spaces outside Bucharest and the development of office buildings and hotels in Bucharest.
In Bucharest, Premiumred is involved in the development of two office buildings, Premium Plaza and Premium Point, which are under construction in Piata Victoriei area, which is viewed as Bucharest’s central business district.
Premium Plaza and Premium Point, both of which entail overall investments worth 35m euros, were started by the former manager of Premiumred, but Parvulescu has his own development plans.
“We’re in advanced talks to buy 8,000 square metres of land in Bucharest, which will be used for the construction of an office building with 50,000 square metres of usable area. The deal should be finalised in June at the latest,” says Parvulescu.
Moreover, the company also wants to acquire two plots of land in Bucharest and build two hotels at the request of some investors interested in this market.
Premium Plaza will open on July 3 this year.
Volksbank group has also been present in Romania for several years through Europolis investment fund, a pioneer of real estate deals in Romania, after the acquisition, in 2003, of Europe House office building in Piata Victoriei.
As a result, Volksbank will control three office buildings in Piata Victoriei area in the near future, given that Premium Point is scheduled for delivery next March.