The representatives of Spain's Gran Via real estate developer, which holds plots of land for the construction of around 5,000 apartments in the Drumul Taberei district of Bucharest, states the only reason why they have yet to start construction works for any of the three projects is that the process of getting construction permits has been extended because of the elections that took place in Bucharest this year.
The company owns the plots of land of the former Tricodava, Electrotehnica and Frigocom plants in western Bucharest, for which it paid almost 100m euros of its own funds in 2006 and 2007. "(...) We'll start construction works for the first project to be authorised (...) next spring," stated David Martinez Vallbona, general manager of Gran Via in Romania.
As a result of the financial crisis, which drove down sales of homes and banking loans for real estate investments, a series of investors have put projects on hold until market conditions improve. Nevertheless, Vallbona is upbeat about his projects.
"We have no loans so far and we are very careful about loans. What I believe was abnormal happened two or three years ago, in terms of the skyrocketing prices. I believe that in fact things are now getting back to normal," considers Vallbona, maintaining he does not target a profit of above 20% for projects in Bucharest.
Vallbona is aware the market is going through a difficult period, both due to the financial crisis and NBR's new lending rules and the high level of VAT for homes, but says one of the three projects of Bucharest may be started with the company's own funds.
"Cash is king. We still have cash. This doesn't mean we'll develop entirely with our own money, so that we plan to reach a ratio of 25-75 between our own funds and banking loans," says Vallbona.
Gran Via this summer started construction works on the first project in Romania, in Constanta, where it will build 1,000 apartments in Flamenco project. "We've so far invested 10m euros of our own funds in this project and we have two offers, from BCR and La Caixa, for a 30m-euro loan, enough for us to finish the first stage of the project, which includes 400 apartments. We've sold around 10% of the homes in this stage and we estimate sales of 15-20%. Still, next year we plan to raise prices as we have a profitability of below 10% for the first block," Vallbona says.
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