Spanish private equity company GED, which is involved in the development of the IRIDE business park in Bucharest, is set to invest 300 to 500 million euros on the Romanian real estate market within the next few years.
GED, in partnership with Spanish bank Caja Madrid, has launched a new investment fund - GED Real Estate Eastern Investments (REEI), which expects to reach a 100-150 million-euro capitalisation.
"Around 80% of the fund's investments will be targeted at Romania. With a 100-150 million-euro capitalisation, the value of the investments will stand at 300 - 500 million euros. We will make 10 investments at the most, worth 30 to 50 million euros, but no sooner than the first quarter of next year," said Robert Luke, the company's managing director, responsible mainly for the fund's private equity activity.
GED intends to acquire large plots outside Bucharest, in cities such as Constanta, Cluj-Napoca and Craiova, where it would handle first-level development (securing urban planning permits, designing projects, securing any other necessary permits) and then sell the plots to other developers. The company's plans also include Bucharest, but not before 2009.
"We think the market in Bucharest is currently overestimated. In 18-24 months, we will turn our attention towards the Capital market, a time when investors could face problems.
"There are currently one or two distressed office projects, as well as several distressed residential complexes. We will be able to buy them at lower prices, and reposition them on the market," added Luke.
The REEI fund was launched with an initial capitalisation of 25 million euros, provided by Caja Madrid, which holds a majority stake, and by GED, which has started to raise funding from private institutions and investors, particularly from Spanish-based ones.
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