Raiffeisen: Real estate market is overheated

Many areas of the real estate market are overheated, and risk management must be conducted cautiously on the basis of thorough information, believes Marinel Burduja, first vice-chairman of Raiffeisen Bank.
“It is obvious that many areas of the real estate market are in danger of overheating. For instance the luxury constructions market, where the demand is already very limited, as those who are able to afford properties have already made their purchases,” Burduja stated in an interview with ZF.
According to Burduja, involvement in real estate projects requires the permanent presence of banking staff on each working construction site, where they closely follow the execution of the project.
“Two months ago, we set up a division specialising in real estate projects, whose job it is to ensure funding for constructions, as well as the distribution and granting of mortgage credits to clients. It is a team that brings together specialists from all of the bank’s divisions,” said Burduja.
He explains one needs to be “extremely rigorous” when it comes to risk management, because if such a fast growth is left unsupervised it could lead to significant problems, such as the situation experienced in France in the 90s, which strongly affected some of the country’s largest banks.
According to Burduja, a large amount of foreign investments are already concentrated around the Eastern borders of the EU, which will implicate Iasi as an investment focal point over the next 10-15 years.
In addition, Burduja commented that Iasi has a large degree of potential in terms of its real estate projects and a business sector which is gaining ground in Raiffeisen’s portfolio. “Heavy industry, construction materials, infrastructure projects, as well as real estate projects and retail were the most profitable fields for the first half of this year,” added Burduja.
According to the first vice-chairman, Raiffeisen has invested over 200 million euros in real estate projects that are currently in various stages of completion, and is in the process of preparing future projects worth approximately 300m euros.