Colliers: High supply would lead to crisis
27 March 2009
The supply on the local real estate market would have lead to a major crisis in three years, if the global crisis had not blocked demand, given that most developers provided no added value for their properties, said Bogdan Georgescu, Managing Partner of the Colliers Romania real estate consultancy company.
''If it had not been for the global crisis, there would have been a major crisis of supply on the real estate market in three-five years, because developments ignored market demand.
The goal was selling a product and not creating added value. In this time of crisis, demand is affected, which leads to blockage on the real estate market. We must learn from the global crisis to avoid a future local crisis,'' Georgescu added.
The main problem of commercial projects, such as offices, malls and industrial-logistics spaces, is the impossibility of obtaining financing, considering that banks are demanding that 50% of these projects be pre-leased as of the beginning of construction, which lasts about two years.
''As long as companies look for short-term solutions, for some three-six months, it will be extremely difficult to find those interested in pre-renting some spaces two years in advance, as banks are now demanding,'' the company official said.
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