Despite demand estimated at 135,000 units, half of the 2,000 new homes completed in Bucharest last year are empty, reveals an analysis by Polish consultancy company REAS in partnership with consultant Nicusor Dinu.
The data in the analysis reveal that most homes delivered in the first phase of Baneasa project's development are available for rent, for 3,500 to 4,000 euros, while in the Emerald Residences project developed on the shore of the Tei Lake only about 100 flats out of 279 will be occupied by owners.
As far as projects like Quadra Place and Central Park are concerned, which were completed last year, about one quarter of the total flats have either been sold or offered for rent.
A large part of new flats are now being bought by investors that either pursue good return from rents or 30 to 50% profits from resale of homes.
They bought these homes in the early development stages at promotional prices relying on the high demand on the residential market in Bucharest.
"Pessimists say this phenomenon might expand in Bucharest starting this spring, when a significant number of projects is to be delivered (...) The question is: how many new flats will actually see Bucharest people live in them especially in areas lacking basic infrastructure? Will we see these projects half empty?" the authors of the study wonder.
Information from developers shows that 5,000 to 6,000 homes will be delivered this year, that is at least twice more than last year.
Investors that bought tens, hundreds or maybe even thousands of homes are also betting on an improvement in the people's purchasing power, which will allow them to either rent or resell those homes to end users.
"Investors that bought flats to rent them ask for a lot of money for this purpose. For instance, the asking rent for two and three-bedroom flats in Baneasa project is 3,500-4,000 euros per month. The same money could be used to rent a villa in the same area, with similar amenities. One may say that investor expectations are much too high considering the realities of the current market," the analysis shows.
Baneasa district is in very high demand from expats whose offices are located in Northern Bucharest, and the three-bedroom flats in Baneasa project have about 200 square metres of floor space and sell for 400,000 euros.
The still slow pace of housing projects completion allows investors to ask such high prices, yet things might change over the coming years, considering more than 10,000 homes are expected for delivery next year, a new record for the residential market in Bucharest.
Investors will have to cash in on their profits by selling the homes at some point, at which time a high number of flats will become available, some on the primary market and some on the secondary market.
The completion of a significant number of new homes could also affect the market of flats rented in old blocks, considering a large part of the demand for new homes comes from those who are now living in rented flats, as rents have reached levels that make taking out a loan to buy a home attractive.
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